Running a small business can be challenging and expensive but did you know that there are some key tax deductions which can reduce some of those outgoings and help businesses to grow?
Take a look at this list to see if there are any savings you might be missing out on!
As well as expenses such as office supplies and equipment, employee wages, business insurance premiums, utility bills, marketing, and advertising, it is also possible to claim certain employee benefits (such as health insurance, pensions, and childcare vouchers) as your business expenses. And don’t forget to claim expenses for vehicles and travel!
If your business runs from a property with a rateable value of less than £12,000, then your business could be eligible for 100% SBRR. This relief tapers down gradually from 100% to 0% for rateable values between £12,001 and £15,000.
Developing innovative products, services or processes or improving existing ones? Then you could claim tax credits to help towards staff wages, utilities for the work, software, etc. You could also be eligible to claim expenses on some qualifying indirect activities such as maintenance of equipment and research by students and researchers.
Similar to R&D tax relief, CITR allows the development and production within specific creative areas to be eligible for deductions in corporation tax. If your business focusses on areas such as video games, television programming, museum or gallery exhibitions, film production, orchestral concerts, theatrical productions or animation, then you could be eligible for tax relief.
This allowance enables you to deduct the costs of investing in plants and machinery, up to a fixed amount, from your business profits before paying any tax, thus reducing your taxable income. This can include items you keep to use in your business, such as computers, integral features (including lifts, lighting and heating systems) and some fixtures, for example, staff bathrooms and canteen facilities. Business vans can also be included in the AIA, but not cars (although these could be covered by other allowances).
As an employer, you may be able to reduce your National Insurance bill by up to £10,500 a year by claiming Employment Allowance. This means you pay less employers’ Class 1 National Insurance each time you run your payroll until you reach the £10,500 threshold or the tax year ends, whichever is sooner.
When running a business from your home, you will need to separate your business costs from personal costs for certain things, such as electricity, gas, and council tax. As this can be tricky, HMRC provides an alternative simplified expenses flat rate which enables a fixed monthly deduction based on the number of people living in the property.
Benevolence can be doubly effective for small businesses, as businesses can offset costs against profits, reducing corporation tax. Businesses can gift money, equipment, shares in another company, and even provide employee time and expertise to charities, all of which can benefit the whole community!
Trivial benefits are defined as costing you £50 or less to provide, not cash or a cash voucher, not a reward for work or performance AND it not in the terms of an employment contract. You don’t need to pay tax or National Insurance, or let HMRC know about these.
If you would like tailored advice on these and other tax breaks for your small business, or are unsure which deductions you are eligible for, we are ready and able to help at Palm Accountancy. We can ensure that you claim all eligible expenses while remaining compliant with HMRC regulations, so do contact us for advice and support.
