1. Talk to your accountant when in doubt
Business owners often complain about their accountant and how they have too much tax to pay.
The truth is that the business owners who regard their accountant as trusted adviser and someone who can help them save tax are often the ones who are paying as little tax as possible. If you don’t talk to your accountant; change accountant.
2. Know your industry
Keep engaged with your trade body or association, attend their events, and read the newsletters. Most industries have special dispensations and allowances approved by HMRC, such as uniform allowances. Your trade body or union are on your side.
3. Spend more time on your business
Are you really the best person to do your bookkeeping or VAT returns? Your business will benefit from you spending time working on it, whilst letting the bookkeepers and accountants do what they do
best. For what you may think you are saving in fees you are probably losing out by not claiming for everything you are entitled to.
4. Tax code
Check your using the right tax code. If you’re on the wrong code, you may be paying too much tax.
5. Capital gains tax allowance
Capital gains (2019/20) under £12,000 are tax-free. Married couples and civil partners who own assets jointly can claim a double allowance of £24,000. CGT is charged at 18% if you are a standard rate taxpayer, and 28% if you pay tax at a higher rate. For 2019-20, the tax-free allowance rises to £12,500 per person.
6. Tax return deadlines
If you are filing paper tax return the deadline is the 31st October. You can do your tax online up to 31 January, but paper tax returns need to be in three months earlier than online tax returns to avoid a £100 fine.
7. Annual investment allowance
As a business, take advantage of the annual investment allowance (AIA) to claim for capital expenditure on items, such as, tools and computers. From January 2019, you can currently claim relief on up to £1,000,000 a year.
8. Tax-deductible expenses
Don’t forget to claim all your tax-deductible expenses, including cash expenditure where eligible.
9. Self-employed car costs
You can claim the running costs of a car and there are capital allowances that you may be able to claim on the cost of buying one. If you use the same car privately, you can claim a proportion of the total costs.
10. Cash-flow boost for self-employed
If you are setting up as self-employed, you may be able to improve your cash flow by choosing an accounting year that ends early in the tax year. This maximises the delay between earning your profits and your final tax demand.
11. Annual losses
You can carry forward losses from one year and offset them against profits from the next, and in some circumstances, losses can be carried back to obtain a tax refund.
12. Payments on account
If you are self-employed and expect to earn less in 2020-21 than you did in 2019-20, you can apply to reduce your payment on account.
13. Rent a room
Rent a room relief is an optional scheme that lets you receive up to £7,500 in rent each year for an individual who let furnished accommodation in their only or main residence.
14. Landlord’s energy-saving allowance
If you rent out property you can claim special tax allowance of up to £1,500 for insulation, draught proofing and installing a hot water system, per dwelling house
15. Landlord’s expenses
If you rent out property, you can deduct a range of costs before declaring your taxable income. These include the wages of gardeners and cleaners and letting agency fees.
16. Tax relief on your mortgage
You can claim tax relief on the interest on a mortgage you take out to buy a rental property – even if it the rental property is abroad. From 6 April 2020, tax relief for finance costs will be restricted to the basic rate of income tax, currently 20%.
17. Reduce capital gains tax (CGT) on a rental property
Landlords are normally liable for CGT when they sell a rental property. If it has been your main home at some time in the past, you can claim tax relief for the last three years of ownership.
18. ISA allowance
Use your tax-free ISA allowance. In 2019-20, the overall limit is £20,000.
19. No CGT on shares held in an ISA
There is no capital gains tax to pay when you sell shares or units held in an ISA.
20. Junior ISA
Use Junior ISA or Children’s Bonus Bonds to avoid being taxed on gifts you make to your own children.