When you’re running a business it’s easy to get caught up in the day to day events. Stock control, dealing with customers, staff problems… The list can be endless. Unfortunately, concentrating on the day-to-day often means that you lose sight of the bigger picture – and a vital part of that is making sure your tax affairs are arranged as efficiently and effectively as possible.
No one wants to pay more tax than they need to: in a bid to help you do that, here are ten tax saving tips for anyone running a business.
1. First of all take account of what you bring into the business. It might be a computer, a phone, office furniture. These items need to be accounted for in the business, at their proper market value.
2. Secondly, try and set up your business with the most tax effective structure – we’ll be happy to advise you on whether you should trade as a sole trader or a limited company, and we’ll happily talk you through the advantages and disadvantages of partnerships and limited liability partnerships.
3. It’s a basic business principle but make sure you keep accurate records – it’s absolutely crucial where your tax affairs are concerned, especially when it comes to claiming the various tax reliefs available.
4. Keep up to date with HMRC’s rules and regulations as well. Sadly the penalties for non-compliance are becoming ever more severe – and if you do find that you can’t pay your tax bill at any time make sure you contact the Revenue’s business payment support service, before they contact you.
5. If you’re using your home as an office make sure that you claim the maximum amount possible. We’ll help you decide whether to claim the flat weekly rate, or a percentage of all your running costs (which can include your mortgage interest).
6. If you’re registered for VAT (the threshold for tax year 2013/2014 is £79,000) look at whether the flat rate scheme may be better for you. In many cases this can lead to significant savings, even with the rate increasing to 20%.
7. Make sure you keep your pension planning under review. Despite some tightening of the rules there are still some very generous reliefs available on pension contributions, with tax relief given at your highest marginal rate on contributions up to £50,000.
8. Most people running a business know this one, but make sure that you use the allowances for your spouse if they are not used elsewhere. This applies to both income tax and capital gains tax, and as with all these allowances we’ll happily explain the best way to use the allowances.
9. If you can, take advantage of the Annual Investment Allowance. This was recently increased by the Coalition Government and you can currently claim 100% allowance on plant and machinery up to £250,000. Virtually all businesses are eligible for this allowance.
10. Finally, remember to look at the most tax efficient arrangements for your company vehicles: again, we’ll be able to advise you on the pros and cons of all the different methods of buying and using vehicles. It goes without saying that those vehicles with very low CO2 emissions can be extremely tax effective.
There you have it: ten ways to hopefully help you pay less tax. If you would like any more details on any of the ten points listed above then don’t hesitate to contact us.