Fifteen Top Tax Tips For You and Your Business

November 10th 2023 | Posted by phil scott

Paying taxes is simply a part of life, on both a personal and business level.  It’s very important to keep your finances in order and to make sure you are doing what is necessary to keep things running smoothly for your business.

It also pays to be aware of what is going on in the world of tax so that you can make the most of the allowances and opportunities that are available.

Here are 15 Top Tax Tips to help you and your business:

1. Pension Savings – Making pension contributions is tax efficient and cost effective.  So get saving for the future and enjoy tax relief at the same time!

2. National Insurance – Don’t forget to stop paying your Class 2 NI contributions if your business makes the change from self-employed to a company.  NI will now be looked after via the company instead.  Keep on top of your admin, and make sure you’re not overpaying by mistake.

3. Save with an ISA – Each year, you can take advantage of tax-free savings via ISAs.  Don’t forget about this simple opportunity to save tax-free.

4. Your office – If you use your home as your office like many small businesses, you are entitled to a small weekly allowance (£4 per week) to cover the costs of using your home as an office, such as electricity.    If you can provide more details about expenses there is the option for a bigger allowance too.

5. Your phone and broadband – Register your phone and Internet in your business name and the costs and VAT can be claimed.  Or if they are still in your personal name, you are able to claim the business portion of the bill.

6. Your car – For businesses that are VAT registered and using their personal car for business use, utilise the opportunity to claim mileage for business travel, plus claim a portion of the mileage as VAT and reclaim it in your tax return.

7. Starting up your business – Sole traders can claim against profits for items used in their business, even if they were bought before the business started trading.

8. Structure wisely – Think about whether your business is best structured as a limited company or a sole trader.  There are tax benefits to structuring as a limited company (along with other advantages) but also costs and other obligations to fulfil.

9. Pay yourself shrewdly – Extract money from your business in the most tax efficient way possible, by paying a small salary to yourself as a director and then withdrawing the rest as dividends to lessen the burden of income tax and national insurance.

10. Family affair  – Does your spouse earn less than the maximum personal allowance and help in your business?  If so, pay them a wage for their help and reduce your level of taxable profit.

11. Ongoing business expenses – As a sole trader, you can obtain tax relief on ‘wholly & exclusively’ necessary expenses incurred by your business, such as travel & accommodation costs, training courses, stationery, insurance and advertising.

12. Partnership matters – If you’re married or in a civil partnership, it makes sense to maximise the benefits of both personal allowances (£10,800 for 2016-17) and lower tax bands.   If your spouse / partner earns less, think about transferring assets into their name to take advantage of the lower taxable income.

13. Capital Gains – Every year we have an exemption for Capital Gains (£11,100 in 2015/16).  Why not use this to your advantage if you can?  If you have assets to sell and have a spouse, consider whether it is beneficial to put this into joint names and utilise two exemptions.

14. Plan your tax – Work closely with your accountant, speak with them and meet them well before the time comes to file your return. This will give you plenty of time to get things in order and make as many savings as possible!

15. Don’t miss the deadline – Avoid fines by making sure you file your self-assessment tax return on time!  You could get a fine of £100 if you are up to 3 months late (31 Jan for online returns).

Don’t forget that rules, regulations and benefits are frequently changing so remember to keep an eye on new updates to make the best decisions for you and your business.