Any savvy business person will understand the importance of saving money. One area where you can really focus your efforts is your business tax return.
There are many ways you can minimise your liabilities while still meeting your obligations to HMRC. Here are a few to consider.
Maximising savings on your business tax return
Claim all your allowable expenses
This one may sound obvious, but it’s surprising just how many people forget to claim for each and every allowable business expense they incur each year.
A previous survey from Simply Business showed that 65% of business owners failed to file expense claims in 2021, with estimated losses ranging between £100 and £10,000.
If you want to make the most of your business expenses, you’ll need to stay on top of your books. That means holding onto all your receipts and recording all your business expenses, from office supply costs to accountancy fees.
These days, cloud accounting technology makes bookkeeping easier than ever — and you could even hire a professional to take on the task for you.
What you can claim (and how) depends on whether you’re self-employed or run a limited company, so it’s essential to understand all the ins and outs of the system before filing your tax return.
Make use of corporation tax reliefs
If you run a limited company, HMRC offers a wide range of tax breaks to help you minimise your corporation tax bill.
For example, innovative companies looking to make scientific and technological advances in their field may be able to claim research and development (R&D) tax credits on qualifying activities.
Meanwhile, the full expensing scheme allows you to claim a 100% first-year deduction from taxable profits on any qualifying plant and machinery your business buys.
Offset your losses
If your business makes a loss, either through trading or on the sale of an asset, you can usually claim tax relief on your business tax return by offsetting your losses against your taxable profits.
This can reduce your taxable profits for the following year. So while losing money in business isn’t ideal, there is a small silver lining.
Claim employment allowance
If you have staff on the payroll and your employers’ class 1 National Insurance liabilities totalled less than £100,000 in the previous tax year, you may be able to claim employment allowance.
This tax breaks allows certain employers to reduce their National Insurance (NI) bill by up to £5,000.
If you’re eligible, you’ll pay fewer class 1 NI contributions each time you process payroll until you either reach the £5,000 threshold or the tax year ends — whichever comes first.
However, the rules surrounding employment allowance can be complicated,
so we’d recommend speaking to a professional tax advisor before trying to make a claim.
Creative industry reliefs
Creative industries in the UK can benefit from sector-specific reliefs to lower their business tax bill. These include (but are not limited to):
- film tax relief
- video games tax relief
- theatre tax relief
- children’s television tax relief.
To qualify for tax savings, any project must be classed as British. This can be determined through a cultural test created by the British Film Institute.
Find new ways to save
As a business owner, you’ll want to do everything in your power to save wherever possible. Thankfully, there are plenty of options out there to help you do just that — but getting started can be challenging.
We offer practical, honest advice to our clients, helping them minimise their tax obligations when we can.
Get in touch for advice on how to maximise savings on your business tax return.