• The income tax you will pay for 2022-23 will based on your profit, or share of profits, for the trading year ending in the tax year. However, you will have made two payments on account for 2022-23 (January and July 2023) based on your profits for the preceding year. Accordingly, if your profits are increasing you will likely have underpaid tax for 2022-23 and any balance owing will be payable 31 January 2024. If your profits are decreasing, you can elect to make smaller payment on account. Either way, having your estimated trading figures available, to forecast your 2022-23 tax payments, means you have ample time to request reductions in payments on account or save to meet any balance due January 2024.
• Every self-employed person is entitled to earn £12,570 during 2022-23 without paying income tax. If your projected profits (or share of profits), assessable, are lower than this amount your personal tax allowance (or part of the allowance) may be wasted. To avoid this, you can defer claims for capital allowances, or perhaps defer refurbishment or other non-recurring costs to increase your taxable profits and fully utilize your personal tax allowance. These adjustments will tend to push tax relief on deferred expenditure into future years.
• If your share of profits looks as if it will breach one of the thresholds and push you into higher, marginal rates of tax (for example: loss of child benefit if income exceeds £50,000, loss of your personal allowance if your income exceeds £100,000, or a reduction in the amount of pension relief you can claim if your income exceeds £240,000. To counter these risks, you could consider bringing forward capital investments, in plant, equipment or commerical vehicles and claim addition capital allowances.
• Self-employed farmers, who can experience significant variations in the level of profits achieved, should take advantage of the extended averaging rules that entitle them to average their profits over a five-year or two-year period for 2022-23.
• In planning for tax payments, based on profits assessable for 2022-23, business owners should be aware that generous tax allowances are still available for qualifying capital expenditure. The Annual Investment Allowance allows you to claim a 100% write off for expenditure after 1 January 2016, up to a £200,000 limit. This limit was increased for a temporary period now extended from 1 January 2019 to 31 March 2023 at £1m. This is a useful adjustment device to reduce taxable profits and save tax, whilst maintaining published profits in your profit statement.
• Class 4 National Insurance is based on the level of business profits: 10.25% on profits between £9,880 and £50,270, and 3.25% on profits over £50,270. Any reductions you can achieve in your taxable business income will also reduce this significant NIC charge.
• The Autumn Statement 2016 changed the rules for the VAT Flat Rate Scheme. All users of this scheme should crunch the numbers to see if they qualify as a limited cost trader. If they do, a flat rate of 16.5% must be applied and this may preclude the advantages of registering for the scheme.
• Finally, readers should take a look at our check list for individuals’ subject to income tax, as all of the comments made will help self-employed persons reduce their tax liabilities.

And don’t forget, you pay tax on the profits you make, not the drawings you take from your business!