We are now entering the time of year that generally strikes fear into the hearts of many small business owners namely, tax time. Shelling out a substantial percentage of the year’s income is stressful enough, but tax season also brings with it a great deal of complexity and confusion. Tax laws are constantly changing and being revised, and it can be difficult for small business owners to keep up. And what adds even more stress to the tax season is that even innocent mistakes or oversights can lead to big penalties.
Said Gerald Irwin of Sutton Coldfield based Licensed Insolvency Practitioners and Business Advisers, “it is important for small businesses to take advantage of all tax breaks and incentives and, if in doubt they should ask their financial advisers.”
For example, sole traders and business partners may claim a proportion of their car’s running costs, including petrol, insurance, road tax, repairs and maintenance, based on their annual business mileage. However, regular home to work travel doesn’t count as ‘business use’ for this purpose. On top of all the running costs, you can also claim capital allowances on the car. For a new car, you get a full year’s allowance in the year of purchase, even if you buy it on the very last day of your accounting period. You will usually also get a balancing allowance when you sell your old car. So, changing your car on a regular basis can make good sense for tax purposes.
Businesses should make the most of travel and subsistence as when away on business travel subsistence costs are fully allowable. Sole traders and partnerships can also claim the cost of business calls on home phones and mobiles. Line rental can also be claimed where it is purely a business line. Director and shareholders may claim reimbursement for the cost of business calls made from home phones. Your company can also buy you a mobile phone without any taxable Benefit in Kind arising.
Mr. Irwin concluded that these are just some of the most common types of deduction available to almost any kind of business. It is important for businesses to be imaginative as almost anything which can be demonstrated as been purchased for business purposes will qualify for some kind of deduction.