When operating a business, there are many costs involved. Some are mandatory, while others can be avoided. The tax deduction is one of the highest costs that are incurred during the life of a business.
Every business has an obligation to pay a specific tax amount to HMRC. Paying the correct tax does not mean not claiming the legal tax deductions. It is your business, right? And you should not ignore it.
The taxable business
In today’s times, running a business has become challenging as there are many costs involved on a day-to-day basis. Every business is trying to fund out ways to ease off their financial burden.
There may be many bills that you can avoid, but some costs are mandatory to cater to the business’s smooth functioning. Taxes are an essential money outlet in the business. But few taxes can be recouped.
As a business, the taxes you pay are depending on your business performance on a day-to-day basis. The tax amount you pay can be reduced with a tax break providing relief to your business costs.
Many business owners start their own business by borrowing take to start up loans for bad credit, but they are not aware of the various costs that are eligible for a tax deduction. A business owner needs to be conscious of all the mandatory business tax deductions.
Ways for tax relief
- The Car
Many sole traders or business partners can claim the running costs for their costs. Other factors included in their car costs may include insurance, repairs, road tax, petrol, maintenance, etc.
Some things are excluded from this category, such as regular home-to-work travel, not referred to as business use.
Buying a new car even on the last day of your accounting period will get you a full year’s allowance in the year of purchase. A good way is to keep changing your car as you get a balancing allowance on selling your old car.
2. Your Home
Many business owners are aware of all the tax breaks and deductions work from home, even if just doing the paperwork. This has to be occasional and not regular.
In this case, if you have borrowed, look for instant loans for a new home, and working from home is counted as business use, the owner can claim a proportion of the lighting bills and other business-relevant bills such as heating, etc.
3. Your Family
Family is a pillar of strength for everybody, and getting the proper support for your business is unmatchable. Unfortunately, there is no claim for family support.
However, other ways can get you the claim for the support your family provides to you. If any family member works for your business, you can pay them a decent amount and count it as a business expense.
For example, if your wife or daughter takes business calls for you from the household, then they are a part of your business, and you can claim for their salary.
4. Childcare Costs
Child care costs are generous tax reliefs allowed by the government.
For example, if you run a crèche service in your workspace for your employees’ children. It is available for all. If your own children are also using it, the tax deduction will include the cost incurred on the crèche without providing a taxable benefit in kind for you.
5. Telephones
In any business, line rentals are claimed as a tax benefit that is purely dedicated to business. But if an owner is receiving calls on the home phone o mobile, it can also be claimed as it is business-related.
6. Loans and Overdrafts
If you pay any interest on overdrawn business accounts, it is a deductible cost.
On the contrary, personal costs are usually are non-allowable. To save money, instead of buying personally, you can borrow within the business.
7. Pension Contributions
If you are making the pension contributions within the limit, you are liable to get the tax relief. It is applicable in both cases, sole proprietorship and partnership.
This also includes the contributions of your family members in the business.
8. Staff Parties
If you incur any entertainment costs on your staff, such as staff parties, they are usually deductible. For example, organizing a Christmas party or an annual meet is included in this tax deduction.
There is a limit to per head cost, i.e., £150. This cost can be used to exempt one or more functions per year, but the price should not exceed £150 per head.
Conclusion
Regardless of your business structure, i.e., sole proprietorship or partnership, it is your right to make a claim on everything that you are liable to.
You have to be alert and aware of all the things that have been purchased or used for business purposes. All these costs qualify for a tax deduction.