End-of-Financial-Year Guide for Tradespeople

Note: This article is for UK based readers and provides general tips and information only. It is not intended as tax advice. For specific guidance, please consult a qualified tax professional.

As the end of the financial year (EOFY) approaches, it’s time to pause, reflect, and take control of your business finances. For electricians, plumbers, and other tradespeople, the EOFY isn’t just about submitting a tax return; it’s a chance to maximise profitability and ensure your business is set up for success in the year ahead. 

Here’s a practical guide to help you navigate the EOFY like a pro, with tips on maximising tax-deductible expenses, streamlining your financial admin, and using tools like Fergus job management software to simplify the process. 

Get Your Books in Order

The first step to EOFY success is ensuring your financial records are accurate and up-to-date. This includes: 

• Invoices: Ensure all invoices have been sent and payments are reconciled. 
• Receipts: Collect and organise receipts for any expenses incurred over the year. 
• Bank Statements: Match your bank statements with your accounting records to spot any discrepancies. 
• Tax Documents: Ensure you have all necessary paperwork, including P60s (if you have employees) and VAT records (if applicable). 

Using software like Fergus can simplify this process by automatically tracking expenses, generating invoices, and integrating with your accounting software. 

Review Your Tax-Deductible Expenses

Tax-deductible expenses can significantly reduce your taxable income, but many tradespeople miss out simply because they’re unsure what they can claim. Here’s a breakdown of common deductible expenses. 

1. a) Tools and Equipment

• Any tools, machinery, or equipment purchased for work purposes are usually tax-deductible. This includes maintenance and repair costs. 

1. b) Work Vehicle Expenses

• If you use a van or other vehicle for work, you can claim expenses such as fuel, insurance, maintenance, and even the cost of leasing or financing. 

1. c) Office and Business Premises

• Whether you work from home or rent a workshop, you can claim a portion of your rent, utilities, and office supplies. 

1. d) Training and Development

• Courses, certifications, or other training directly related to your trade are eligible for tax deductions. 

1. e) Protective Clothing and Uniforms

• Items like work boots, high-visibility jackets, and branded uniforms are all tax-deductible. 

1. f) Software and Subscriptions

• Job management tools like Fergus, accounting software, and any other subscriptions that support your business operations can be claimed. 

Depreciation: Don’t Overlook It

For larger purchases like vehicles or expensive machinery, you may be able to claim depreciation. This means you can spread the cost of the asset over several years, reducing your taxable income year by year. Speak to your accountant about which assets qualify and how to claim them. 

Assess Your Profit Margins

EOFY isn’t just about taxes; it’s also a great time to review your profitability. Ask yourself: 

• Are your pricing structures effective? Ensure your quotes cover all costs, including labour, materials, and overheads. 
• Are you tracking job costs accurately? Tools like Fergus can help by breaking down costs for each job, so you know exactly where your money is going. 
• Are there any areas to cut costs? Look at your expenses and identify any unnecessary spending. 

Plan for the Year Ahead

EOFY provides an opportunity to set goals and plan improvements for the next financial year. Consider: 

• Budgeting: Use your current financial data to create a realistic budget. 
• Cash Flow Management: Identify patterns in your income and expenses to improve cash flow. 
• Growth Opportunities: Explore ways to expand your business, whether through new services, hiring additional staff, or investing in marketing. 

Stay on Top of VAT

If you’re VAT-registered, the EOFY is an excellent time to review your VAT scheme. Depending on your turnover and expenses, you might benefit from switching schemes (e.g., Flat Rate Scheme vs. Standard Rate). Make sure all VAT returns are submitted on time to avoid penalties. 

Invest in Technology for Financial Admin

Managing finances manually can be overwhelming, especially during the EOFY crunch. That’s where job management software like Fergus can make a huge difference. 

How Fergus Can Help: 

• Expense Tracking: Automatically categorises and tracks your expenses, making it easier to claim deductions. 
• Invoice Management: Ensures all jobs are invoiced correctly and on time. 
• Integration with Accounting Software: Syncs with platforms like Xero or QuickBooks for seamless financial management. 
• Job Costing: Provides detailed insights into the profitability of each job, helping you make data-driven decisions. 
• Time-Saving: Reduces admin time, so you can focus on running your business. 

By investing in technology, you’ll not only simplify your EOFY tasks but also set up systems that keep your finances in check year-round. 

Work with a Good Accountant

A knowledgeable accountant who understands the trades industry can save you time, money, and stress. They can: 

• Ensure you’re claiming all eligible deductions. 
• Provide advice on tax planning and compliance. 
• Help you optimise your business structure for tax efficiency. 
• Identify growth opportunities and financial risks. 

Avoid Common EOFY Pitfalls

Finally, be aware of these common EOFY mistakes: 

• Procrastination: Leaving everything to the last-minute increases stress and the risk of errors. 
• Missing Deadlines: HMRC imposes hefty fines for late submissions. 
• Poor Record-Keeping: Disorganised records can lead to missed deductions and inaccuracies. 
• Ignoring Cash Flow: Focusing solely on profits without considering cash flow can lead to financial strain. 

The EOFY is more than just a box-ticking exercise; it’s an opportunity to maximise your profitability, streamline your operations, and set your business up for success. By staying organised, taking advantage of tax-deductible expenses, and investing in tools like Fergus job management software, you can make the process smoother and more rewarding.  

Remember, the time and effort you invest now will pay dividends in the long run, both in terms of reduced tax liabilities and a more efficient, profitable business. If you’re unsure about any aspect of the EOFY, don’t hesitate to consult an accountant or financial adviser. 

Here’s to a profitable year ahead!