4 Top Tax Tips for your small business

In this blog we will look at some of the most common tax incentives that apply to small businesses.

1. Register for VAT

If your business turns over more than £85,000 per year you are obligated to register for VAT but even if you are below the threshold, it can still pay to sign up voluntarily. Registering voluntarily can actually give your cash flow a huge boost, allowing you to add 20% to your outgoing invoices (unless you're providing VAT-exempt goods or services) to increase your income over the short term.

The other plus to being VAT registered is it can lead to bigger business deals- as many large organisations will only work with suppliers who are registered for VAT.

2. Take tax off your annual events

The taxman is not usually seen as the charitable sort however when it comes to your work Christmas do, HMRC has a special gift for all limited companies. If it's your only event of the year, you can spend up to £150 per head on your festivities as a tax deductible benefit or as the £150 is an annual limit, you could instead choose to spend £75 per employee on your summer do and the other half on your Christmas do.

Some things to be aware of:

  • Your event must be open to all your employees
  • The £150 is a set limit which must not be exceeded
  • (if you spend as much as a single pound over it instantly becomes taxable)

3. Get your reward for R&D

Did you know there's a tax incentive designed to reward commitment to research and development?

R&D tax credits were 'invented' in 2000 to recognise UK companies 'that seek to research or develop an advance in their field.' These credits usually take the form of corporation tax relief and can even be claimed on unsuccessful R&D projects. Of course you will need to meet certain criteria but if you invest a lot in innovation it's worth exploring. According to HMRC's own 2017 report the claims for this is over £60,000.

4. Claim on clothing

Do you provide your staff with uniform or protective clothing?

If yes, you won't usually need to pay tax or national insurance on those expenses. You also might want to let your staff know which could help them save on their tax bill too. Few people also know that tax rebates are available to all employees who are required to clean, maintain or repair their own uniform. Claims can be backdated to the last 4 tax years! This could add to a nice little pot of gold!

Note the criteria:

A uniform means- 'a set of clothing of a specialised nature that is recognisable as a uniform and is intended to identify its wearer as having a particular occupation. (Examples: nurse/ police uniform.)

These are just a select few common tax breaks for small businesses - there's plenty more. Don't miss out, contact us today for more support with your business:

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