How small business owners can reduce their tax bills
What does the Government do with you taxes you paid? Do you as a small business owner pay too much in taxes? Each small business owner needs to save as much as it is possible. Because of this reason, we would like to explain you how you can reduce your expenses and reduce your tax bills. After reading this article you will know everything.
Most business owners have to travel. The good point is that all business travels are tax deductible. It does not matter if you travel by plane, train, bus or taxi.
However, business travels are only those strictly connected with making profits for your business, for instance, if you are going to meet your customers, or when you travel from one workplace to another one. Tax allowance could be also parking, tickets and even London congestion charges. However, there should be added that costs of traveling from your home to your workplace is not tax deductible. The other idea how you can save your money is setting subsistence against tax. Subsistence includes meals you have during your business trips or meetings with your customers; however everyday lunches which you have at your workplace are not tax-free. In addition, if you need to stay at the hotel during your business trips, you can claim tax relief on it as well.
Moreover, if you work from your home, so you can register it as your home office. In this way, you may claim £4 a week as a business expenses, without having to produce any receipt or any invoice. You can also claim more than this amount, but then you have to proof your expenditures by providing or producing evidences such invoices, receipts, and so forth. Tax allowable are even expenses incurred on transport. Using your own car, you are able to claim 45p per mile for the first 10,000 miles in the year. If you exceed this limit, then per each mile you may receive 25p.
Another option to reduce your tax payment is business record keeping. Remember that keeping good record of your business transactions is really important. Because of this reason, do not throw away any bank statements, purchase invoices, sales invoices and receipts. All of these should be kept in save place and in organize manner, as they have to be presented in case of any tax inspector control. Otherwise, you will be charged a penalty. If you are the owner of the limited company, there is advisable to have your mobile phone contract signed in the company’s name. Thanks to this, you may claim your mobile phone bills as a tax deductible expense. Each company needs a staff, and it is recommended to hire family members, because it can be deducted as a tax expense. The family member has also own Personal Allowance, which is now £10, 000.
Our last proposal is take an advantage from Personal Incidental Payments (also known as PIE’s) which you can claim during your business trips, additionally to your general trip expenditures. PIE’s can be claim for small expenses like coffees, bus tickets, and so forth.