Small Business Tax Deductions

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.

6. Telephones

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.

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