When the government had that advert that stated, ‘tax doesn’t have to be taxing’, most small businesses had a dry chuckle at the idea. Tax is both taxing and baffling for most small businesses and is something that takes up too much time.
As a result, businesses often miss out on things that could legitimately save them money on their tax return. Here are a few examples of how you can save on your business tax.
Cost of business premises
One of the bigger costs for a business with dedicated premises is the actual building itself and the utilities connected with it. All of these need to be added to your tax return and that means the rent for the building, the cost of maintenance and repairs if you do them, insurance, utility bills and even the cost of any security you have. The main things you can’t claim for is the cost of buying or building the property if you did this.
When you work from home, there is still a way to claim expenses. You need to work out what percentage of your home is used for business. So if you use one-quarter of the downstairs space, you could say you use 12.5% of the house. Or you can speak to HMRC about your self assessment and use their ‘simplified expenses’ system for a flat monthly rate.
You can also claim for office expenses associated with the business. This includes business stationery, the costs involved with printing things including printed ink and also postage costs. You can also claim for computers, printers and software but these count as capital allowances so go in a different spot on your return.
Cost of travel
Business-related car or van costs can be included in business expenses. This includes the fuel, insurance, repairs, servicing and any breakdown cover costs as well as hire charges if you hire rather than own the vehicle. Again, there’s a simplified vehicle expenses system that you can use if you don’t want to calculate individual costs.
You can also include costs for train, bus, plane or taxi as well as hotel rooms and the meals if the trip is a business one. You can claim for the cost of going to meetings, other work sites and such but not for the normal commute to your usual place of business.
Legal and financial costs
Any legal or financial costs associated with the company can go on that tax return. This might be the cost of using an accountant to submit the tax return or a solicitor to handle some legal matters. You can also include bank, overdraft and credit card charges as well as interest on loans and bank accounts if they are for the business. If you use cash basis accounting, then there is a limit for interest and bank charges of £500. Again you can speak to HMRC if you are unsure where the limits might apply.
There are lots of other areas where you can make a claim for business tax expenses legitimately as long as you can show receipts or other proof of the money spent. Marketing is one example – if you pay for newspaper advertising, have a website, use social media advertising or other types of marketing, you can include this cost.
Obviously, staff wages are included but you can also claim for associated staff costs. This includes bonuses, your national insurance contributions as an employer and pension contributions. You can add costs for uniforms, protective clothing or costumes for entertainers if these are for the business, but you can’t claim for your own everyday clothing worn while at work.