What are the best tax savings for businesses? Watch our video to find out now or read our blog below.
As a business owner your tax bill at the end of the year can sometimes be daunting, but it doesn’t always have to be.
Here are a few simple things that you can do to keep your tax bill as low as possible.
Buying Gifts for the Directors
Each year, HMRC allows up to £300 worth of gifts to be bought for the directors of each company, and calls them ‘Trivial Gifts’. The whole amount of the tax is deductible, and the VAT can also be fully reclaimed. You can also spend £300 on any family members as long as they are an employee.
However, just remember that HMRC always like to have proof of everything so whenever you buy anything, make sure that you keep accounting records that clearly show the £300 exempt amount has not been exceeded.
Buying Gifts for Staff and Customers
Buying gifts for both staff and customers is tax deductible as long as you meet the certain criteria for them both.
For Staff Members:
- The amount spent per employee has to be less than £50 each.
- The gift is not allowed to be either cash or vouchers.
- The Amount spent per Customer is £50 or less.
- The Gift is not allowed to be alcohol, tobacco or food.
- Your company name is clearly visible on the gift itself.
Throughout the year, you are able to spend up to £150 per person for your employees and the whole of the amount is tax deductible. You can also reclaim the VAT. The amount is not just limited to one event either, such as the Xmas Party. You can have as many parties and nights out as you want, as long as the total amount for the year doesn’t exceed £150.
Use a Tax Software
By using an Accounting software, it is able to prepare and file your returns online whilst also backing up the filing with accuracy. This enables you to to relax that all your tax is being calculated right and protecting you with the proof. This may relieve the stress and the pressure of working it all out yourself, giving you more time to work on the things that you are good at and that you enjoy.
Putting your children on the payroll
In small businesses especially, there are always little jobs that need to be done. These can will be carried out by family members and their children. If they are ages 13 or older you can save tax by adding them to the payroll.
Use of home as office
If you work from home, then you’re eligible to claim a tax deduction to cover part of your home running costs. HMRC allows a £4 a week allowance without asking for any evidence, however if you think this should be higher for you, depending on the amount of time you spend working at home, then you are able make a bigger claim. As always though, make sure that you are able to prove it.
By running your own vehicle costs and then claiming back the mileage using HMRC’s mileage allowance you are able to save more rather than just claiming back the petrol you have paid. If you are a limited company, this will also help you avoid higher tax on company cars. The rate is 45 pence per mile for the first 10,000 miles each year and then 25 pence after that. What a lot of people don’t know is that you can also claim VAT on this!
All in all, there are a lot of savings. And, as an accountant its our job to make sure you get them all.
I hope you found this useful. If you would like a chat, please contact us on firstname.lastname@example.org or by phone on 0151 380 8081.