FD Analytical – Chartered Management Accountants
The UK tax system is one of the most complex within the world, all clients of FD Analytical receive a full business and personal tax review, to ensure that tax liabilities are kept to a minimum. For your own, complete, personal tax review contact us today, in the meantime, we hope you enjoy reading and applying some of our simple (but very effective) tax saving tips.
Tip #1 – Working from home?
If your business is home based, allows a measly £4.00 per week as a standard rate for the business to use your home. This allows taxpayers an annual charge of just £208.00 (52 x £4). It’s a really simple way of calculating a “home office” charge, but in reality this charge could be a LOT more and therefore, get you much more tax relief.
An alternative method of calculating the cost of running your business from home is to add together all of the costs of running your household, such as; rent, utilities, insurances etc. and multiply this by the estimated % of the house that your business occupies.
Try it at least once to make sure that you’re not losing out – but remember to keep your workings and calculations for HMRC.
Tip #2 – Use your own vehicle for business?
Keep a full record of all of the business miles that you complete in your own, personal vehicle, we recommend simply using a diary and each time that you complete a business journey include; the total number of miles, where the journey was to (and from) and why it was business related. Doing this will allow you to reduce your taxable profits by; 45p per mile (for the first 10,000 miles completed each year) and 25p per mile (for all miles over and above 10,000).
In contrast to the above, rather than claim tax relief “by the mile” it is possible to calculate the business use of your own vehicle by totalling the annual costs of running your vehicle, such as; insurance, servicing, repairs, fuel etc. and multiplying this by the proportion of the vehicle that you use for business purposes.
Ensure that you do this exercise at least once to ensure that you’re not paying too much tax.
Tip #3 – Always check your tax code
For the 2016/17 tax year, the standard tax code is 1100L – this means that you are entitled to earn £11,000 per year without paying ANY tax.
If this isn’t your tax code, make sure that you understand why or you may be overpaying tax.
Tip #4 – ALWAYS hit the deadline(s)
HMRC’s deadlines for late filing of tax returns are now more severe than ever, for example, miss the self-assessment filing deadline by just 1 day and HMRC will charge you a penalty of £100.00, miss the filing deadline for VAT by just one day and HMRC may charge you 15% of the total VAT charge!
Planning and preparing your tax return in advance will allow you to “tax plan” much more efficiently AND save you £’s in fines and penalties.
Tip #5 – Get a pension (or increase contributions to your current pension)
Despite many of the historic tax perks now being removed, pension contributions are still treated very favourably from a tax perspective. Contributing to a company or personal pension scheme is one of the most tax efficient things that can be done, for example;
Every £80 that you save into your pension you’ll get £20 tax back, increasing your investment to £100. If you’re a higher rate taxpayer you can claim back an extra £20, so every £100 investment will cost you just £60.
BONUS TIP – Get a GREAT accountant!
A great accountant could be one of the most tax efficient investments you could make, payment to an accountant for an annual tax return should save you significantly more in tax, than the fee that you pay.
Why not contact FD Analytical accountants and we can talk to you in more detail about fantastic tax saving strategies that we can apply to you and your position.
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