Small Business Saturday Blog

Seven ways you may be able to reduce your tax bill

Friday, December 02 at 13:38Accounting | Small Business | Top Tips

Sensible tax planning is an essential tool in making the most of your finances and helping your business’s profitability. Keeping your tax bill to a minimum is not a matter of aggressive or complex tax schemes, but rather of identifying which of the many tax reliefs and allowances specifically granted by law are available to you.

Jo Nockels, Senior Technical Communications Manager at small business specialists TaxAssist Accountants, shares some tips and advice about how to save on your tax bill. 

1. Review your business structure
How you structure your business can have a significant impact on your annual tax bills. During the early years of a business, it may be advisable to operate as a sole trader or partnership, as profits increase it may be more beneficial to form a limited company. An accountant can help you decide which entity suits your circumstances.

2. Buying equipment
Before buying business premises, machinery or equipment, make sure you seek advice. Up to 100% tax relief could be available but the type of asset, timing and value can affect how much tax relief you can obtain and when.

3. Choose a vehicle that matches your needs
Talk to an accountant before buying a new vehicle for your business. There are lots of considerations such as taxable benefits, VAT, capital allowances and how you claim tax relief for repair and fuel costs.

4. Don't forget to reclaim input VAT on petrol
Do you reimburse employees who use their own vehicles and pay for their own fuel at the HMRC approved mileage rates? If so, then don’t forget to reclaim the VAT applicable to the deemed fuel element of the mileage rate. You will need to ensure each employee submits a valid VAT receipt in support of the claim.

5. Make the most of losses
You may be able to turn your losses around by carrying them forward to set against future profits, or setting them against other income for immediate relief. Your accountant can review loss relief claims to ensure that the losses are used tax-efficiently and eases your cashflow ideally at a time that’s best for your circumstances.

6. Household bills
If you are running your business from home, you can offset some of your household bills such as heating, electricity, council tax and water rates. Even if your use is only minor for bookkeeping for example, HM Revenue & Customs will accept a reasonable estimate provided your claim is modest and reflects your circumstances.

7. Save on your rental income
If you rent out property, you can deduct a range of expenses from your rental income. These include Council Tax, utility costs, service charges and even replacing furnishings.

Choosing an accountant who specialises in small businesses could save you money and provide you and your business with expert advice on many financial issues. For more information about TaxAssist Accountants visit their website

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