Last Minute Tax Savings Tips
With 31 January fast approaching, the majority of income tax returns will be submitted in December and January. The downside with completing your tax return so close to the deadline is that there is little warning of the tax payable on 31 January and the other issue is that in preparing the tax return so late, excessive tax could end up being paid. Here are some tips to help reduce your tax bill which you can use to reduce you imminent tax bill.
1. Have you included all of your business costs in your accounts/computation?
Typically when a tax return is being completed so close to the deadline, a lot of invoices will have been omitted (accidentally). Without these invoices, the expense cannot be claimed in the accounts which increases profit therefore increasing the tax payable.
Make sure that all relevant invoices are included.
2. Claimed VAT on all expenses
It is not uncommon to find VAT has not been claimed on all expenses when preparing the accounts. Make sure that you have claimed all the input VAT that is appropriate.
3. Have you claimed all relevant tax reliefs?
There are a wide range of tax reliefs available to businesses, these range from the annual investment allowance to research & development enhanced reliefs.
If your business has done something different in the year then it is worth investigating whether there are reliefs which would have been unavailable previously are now available. An example could be a large capital expenditure project.
4. Started your business in the year?
Pre trading expenses are often forgotten. The reason for this being that a lot has normally happened between time return time and those purchases.
It is important to think back to when the business was just starting, often these are small invoices but can be significant in total.
5. Forgotten about those previous year losses?
If your business has made losses in previous years, have you included the relevant losses brought forward in your computations?
6. Claimed a proportion of business use for your home?
Most owner managed businesses have some business use within the owners’ homes. How much depends on time spent using the home for business and how much of the home is used.
HMRC offer the following information to claim relief (https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home) however this is not particularly generous. Deciding whether or not it is worth using the simplified scheme is a decision based on each business.
7. Claimed rent a room?
Have you rented a room in your home during the year? If so you could claim relief on those rents received. The relief is available for rent received up to £4,250 per year or £81 per week.
If you have received more than £4,250 then it is not as straight forward, instead you should seek advice.
8. Have you made any gift aid donations?
If you have made any charity donations during the year and you are a high or additional rate tax payer, then you should check to see if the donation qualifies for gift aid.
The relief claimed is the difference between your tax rate and the basic rate after grossing up the donation.
For more details, see the following link http://www.hmrc.gov.uk/charities/gift_aid/basics.htm
9. Have you made any pension payments in the year?
With pensions being very topical at the moment, some contributions made could be significant therefore the relief for these could be worth a lot.
You will normally only get relief on pension contributions made to a private pension scheme and as these are normally monthly direct debit these are easily forgotten about.
10. Have you invested in a company during the year?
Some companies allow their investors to claim special reliefs, these can be relevant to capital gains tax and income tax. If you invested via a specialist crowd funding site or similar then you will have normally been informed of the likely tax reliefs. If you simply invested directly then it is worth checking as there could be some valuable tax reliefs available.
Photo courtesy of https://www.flickr.com/photos/59937401@N07/
If you would like to discuss your tax affairs then please contact one of our directors, Roger, Sunny, Catherine or Shane on 01392 432525.
comments powered by