1. You can claim 7 years previous expenses against profits in your first trading year.
Pre-Trading expenses…Normally allowed expenses that had incurred in the 7 years before commencement of trade can be deducted against the profit in the first accounting period, as if they were borne in that year.
2. Don’t forget to claim business travel and subsistence against tax. It all clocks up
Travel and subsistence…Business related travel by any means of transport i.e. Aeroplane, ferry etc is generally allowed, except for the home and office or vice versa.
Where personal car is used to run a business trip, provided such journeys are properly recorded, cost of such journey or the revenue flat rate deduction of £0.45p per mile up to 10,000 and £0.25 thereafter could be claimed. Forgot to keep the details of your business travel log? Don’t worry! proportion of the total cost of transport can still be claimed based on your average trip.
The cost of subsistence during your or your staff qualifying business trip are also allowed deduction. However, cost of homemade food for the journey will not be allowed.
3. Working from home? You can claim part of your utility bills as expenses
The home office…If you use your all or part of your home as an office, you can deduct costs attributable to a home office, including a portion of some household utility expenses. To qualify, you must use the office “regularly” as your principal place of business or a place to meet or deal with customers, clients or patients in the normal course of business.
4. Look after your team’s futures. Employee pension contributions are tax deductible
Payments made by the employers to a qualifying pension plan for the benefit of its employees are allowable deduction. However, one need to be mindful that the amount paid are not excessive when compared to basic salary and shouldn’t be a one off payment at the time of winding up of the business. In addition, normal pension contribution annual and lifetime limits should also need to be considered.
5. Treat your employees to entertainment to the tune of £150 each per year, and offset it against tax
Generally not allowed. However, entertainment cost not in excess of £150 per employee per year is deductible expenses for the business and is tax free benefit for the employee. Gifts are deductable only if conditions below are met:
- the cost of gift is no more than £50 to any one person
- the gift has a clear business name, logo or business advert
- the gift is not a food, drink or tobacco. (Unless the business deals with such items)
Want more great advice like this? Talk to Harland.