We have been advising small businesses on tax deductions for over 20 years. Over the years there are a few suggestion that we give to clients that haven’t really changed. Here are top ten tax deductible expenses.
1. Your vehicle
Sole traders as well as business partners may claim a percentage of their car’s operating costs, including petrol, insurance, road tax, vehicle repairs and maintenance, dependant on their annual small business mileage. Unfortunately, your regular residence to work journey doesn’t count as ‘business use’ for this specific purpose.
Along with all the operating costs, it’s also possible to claim capital allowances for the car.
For a brand new car, you get an entire year’s allowance in the 12 months of purchase, even if you purchase it within the very final day of your respective accounting period. You will typically also get a balancing allowance once you sell your previous car. So, changing your vehicle frequently makes sense for tax reasons!
All your investment capital allowances must be limited to your ‘business use’ portion in the same manner as your operating costs.
2. Your house
The owners of all small businesses will probably work at home at the very least from time to time, even if only to do the documents from time to time.
In these instances, the taxpayer may declare an appropriate amount of his / her house expenses as a business expense such as heating and lighting expenses and local authority or council tax.
Here the proportion is normally based on the volume of rooms in your house, excluding bath rooms, toilets, kitchen areas and hallways.
3. All your family
Unfortunately, you can’t claim for the price of supporting your loved ones.
Nevertheless, there is a solution to claim deductions for the assist which all your family members provides to your company. If any family member does virtually any work with your business, you may pay them a suitable wage and claim it as a business expense. Be creative – if your wife takes company calls on your house phone then she’s doing work for the business!
If the individual has no additional income some or all of the salary will likely be tax free as a result of the income tax personal allowance and national insurance threshold.
4. Taking advantage of Traveling and Subsistence
Let’s suppose you have to go to Paris upon business and stay presently there overnight.
You could have a cheap flight, slog the right path into the city through Charles de Gaul through train and metro and grab a fast bite at McDonalds. Inexpensive, not cheerful and completely allowable.
Alternatively, you could travel top class by Eurostar, move round the city by taxi as well as dine at Maxine’s. Expensive, much more cheerful but still fully allowable.
The stage is, when you’re aside on business, your travel and subsistence expenses are fully allowable and it is none of the Revenue’s business how much you need to spend.
As an outcome, having a slap up meal as long as you’re away on business will frequently end up costing you only half around the same meal in your own home. So, why not deal with yourself? The Government’s discussing the bill!
5. Childcare Expenses
There are now a few very generous tax reliefs with regard to childcare costs.
For instance, if you run a crèche at the premises which is open to all employees’ children, the cost will end up being tax deductible and you will see no taxable Benefit in Kind for you personally if your own children utilize it.
Sole traders and partnerships can claim the price of business calls on house phones and mobiles. Line rental may also be claimed where it is purely a company line.
Director/shareholders may claim reimbursement for the price of business calls made type home phones.
Your company may also buy you a cell phone without any taxable Advantage in Kind arising.
7. Financial loans and Overdrafts
Generally talking, interest costs which you incur personally aren’t usually allowable, whereas curiosity on overdrawn business company accounts and loans is insurance deductible.
The best strategy from the tax stand-point therefore, would be to borrow within the business instead of personally.
8. Pension Efforts
As long as you stick inside the relevant contribution limits, you will be able to get tax relief for pension contributions that you simply either make personally, like a sole trader or companion, or which your company makes for you.
This will extend to contributions for just about any family members working inside your business.
9. Decorating work
The cost of decorating your company premises will be permitted.
This could extend to items for example paintings and antiques that your use to decorate areas which is seen by customers and everyone. You will need to create a business case for the actual expenditure, and larger items is only going to attract relief under the administrative centre allowances system but, nonetheless, the scope exists for many significant deductions to end up being claimed.
10. Staff Events
The cost of staff parties and every other form of staff entertaining is generally deductible. Typically, this covers the Xmas party or even annual dinner.
As long since the annual cost of any kind of staff functions is held under £150 a mind, there will be absolutely no taxable Benefit in Kind for that employees either. This allowance may be used to exempt one or more functions every year, the total cost which does not exceed £150 for each head.
Many local businesses around the Wirral and Liverpool have found PAYE more frustrating than ever. After calling the HMRC’s PAYE department many businesses found themselves disappointingly on hold for hours only to be informed that they may have to wait up to 10 months to get their PAYE refund processed.
It seems the government completely over-looked over-payments when creating the RTIs. The words that come to many minds may be, ‘great at taking money, poor at giving it back.’ When cash flow is so important how can some businesses be expected to wait 10 months to receive back their hard earned cash?
The blockers have been reported as a combination of over sensitivity to fraudulent claims and internal data integrity issues. As vague as that sounds the obstacles it has created are very obvious. Unless there is a review by an external agency, which seems very unlikely, these issues are going to remain evident year after year.
So how can a business combat these potential problems?
The answer is reducing human errors. A study by Bloomberg showed that human errors are the number one issue when it comes to accounting. The biggest of which is made during the data entry stage. Another form of error is using incorrect calculations. Neglecting to enter the right details or omitting items that could be included as taxable benefits is also another very human error.
When it comes to payroll it is very important to have an accountancy firm that cares. If you would like any information on speeding up your PAYE refund please call one of our friendly accountants for a free no obligation chat.
In our strive to help as many local businesses as we can we have dedicated ourselves and our staff to providing 8 ways that we can provide free advice to Liverpool and Wirral based companies. In our quest to add value to our customers we believe that below are 8 of the most worrying and important factors that we day-to-day proactively help our clients with:
- Profits: As a business profit isn’t just a word it’s a must. Whereas most accountant’s favourite word will be ‘CUTS’ we have dedicated ourselves to the word ‘GROW’. How can we help you grow your profit not cut your costs!
- Cash flow: Plan, manage, raise and collect. We can help with every stage of cash flow. As the life blood of a company is there anything more important to be well informed about?
- Personal income: We help our clients to focus on increasing what they take home after tax.
- Other tax bills: No company wants to pay taxes and we will help you find ways to reduce your tax bill. If big companies like Starbucks can get away with not paying a penny why should you pay a penny more than you have to?
- Business value: Most accountant companies only care about the books we care about how and where you want to grow your business and can provide advice to suit.
- Personal wealth: Retire when you want and in the style you want. Financial planning is essential to personal wealth. Why not start today!
- Work-life balance: Lots of little things can add up to one very big stressful thing. We consider good accounting to be lots of little things done well. Bookkeeping, pay roll and financial planning can easily become a business owner’s worst nightmare. Having a good accountant means less stress and more time with your family. Let us help.
- Improving the financial situation of key family members: Often we work for our families, once all the hard work is done don’t let a lack of financial knowledge erode the help you provide to your family be it education funding or transferring wealth. We have years of experience that could save your family a lot of time and money.
Our friendly staff would love to help you with any of our top 8 factors. So call today for a free, friendly no obligation chat and find out how we can help you.
If you are a small business owner then the likelihood is that at one time or another you will have found yourself doing jobs that are otherwise below your pay grade… Wondering do all business owners have to run down to the shop to buy milk for everyone? I’m sure one time or another you have asked yourself… Is this really going to work will I still be in this same small office in the next 5 years? Or maybe you have found yourself working at unusual hours wondering… Do all small business owners work at 2 am in the morning? Well a recent study may have the answers all those questions and more.
According to a recent survey by AXA PPP Healthcare the next half a decade spells a time of prosperity for Small Businesses. The survey found that 62% of small business owners are prospering and that 2/3 of SME owners have very positive predictions for the next 5 years of business.
Whilst 58% of SMEs acknowledge the additional flexibility that owning a business allows them to have. 70% of all SMEs in the surveyed mentioned that that are proud, inspired and happy to be owning their own business. Business director for AXA PPP Healthcare, Glen Parkinson, said: “The future looks bright for the UK’s SMEs, which is great news for the economy, as they are the backbone of our economic output.”
Business strategy was the area that most surveyed small business owners said preoccupied most of their time with 81% of business owners involved in business strategy daily. A further 61% of small business owners are also involved in the day-to-day tasks of business operations. Painting the picture of a very hands-on approach for small business owners.
Over 1/3 of business owners are happy to switch off from their business after work hours and find themselves enjoying time with family (35% of time), exercising (22% of time) and going down the local for a few refreshing pints (11% of time).
In total 2/3 of all SME owners have stated that they have a good work-life balance!
If you want to keep more time for yourself, reduce stress and spend time working on what you are really good at, then why not have Andrew Keates Liverpool Accountants take care of your payroll and finance. To find out how we can help you and your business book a free no-obligation consultation today.
Sage, the accounting the popular software company, has issued warnings that thousands of UK SMEs could be caught off guard by what has been termed the auto-enrolment ‘blind-spot’ because of the new National Living Wage changes.
With only six months until the new National Living Wage changes come into effect, Sage is advising small businesses to make significant preparations as the auto-enrolment contributions for over one million employees is set to dramatically increase.
The changes to National Living Wage means that small businesses will need to budget for a wage cost of over £5,000 per employee.
Staff are eligible for auto-enrolment if that are more than 22 years of age, less than the state pension age, are primarily UK based and are earning over £10,000 per year. As of yet over 5 million UK professionals have been placed on the auto-enrolment pension scheme. Which is a scheme that is required for any workplace that has more than one member of staff.
Lee Perkins, managing director, Sage UKI, said: “Business owners are bracing themselves for the impact of increased staffing costs with the NLW.
The managing director of Sage UKI said that in his opinion businesses are ready for the increase in staffing cost but are not currently preoccupied with preparing for the impact that the, “increased pension contributions required for a tranche of employees that will be earning an additional £5,000”.
Overall this means that by October 2018 small businesses will have to contribute 3% of an individuals annual salary into the pension scheme.
Small business owners need to be aware of this unexpected cost and act as soon as possible. If you need help preparing for these unforeseen changes please speak to one of our payroll advisors. If you aren’t currently a client please take advantage of a free no-obligation consultation to find out more about these changes.
This month a study at the ACCA found that the difference between a fast-growing SME and slow-growing SME could well be your accountant. The study found a strong connection between the financial functions of a small business and it’s rate of growth.
Sounds pretty straight forward to Andrew Keates – accountants wirral, the better the financial function of a company surely the better the company and the better the growth rate anyway? Well no not really, the study found that a company that had key financial functions beyond just an auxiliary role and instead took on roles similar to a strategic partnership massively increased the rate of growth of an SME.
The study was based around 8 interviews with financial officers and financial controllers at businesses growing by 70% over 3 years. The study ultimately found that financial controllers that were freed of the small stresses of the simple accountancy and given more time to play a central role in the business planning attributed greatly to the large growth rates.
All the financial controllers in the study had roles that extended beyond the traditional operating day to day tasks associated with a financial controller. Growth was shown to be driven through, cash flow estimates, local tax regimes, and analysing cash flow injections for potential new markets. All tasks that you would expect to promote growth in a company!
If you’re an SME why not let Andrew Keates – Accountants Wirral, Liverpool and Chester take away some of the day to day accounting stresses and give your team time to inject growth into your company. For more information on the study please see here ACCA.