1. Registering with HMRC
2. Tax return basics
4. Claiming business expenditure
Claiming business expenditure
It is simply not possible to cover all of the expenses a business can claim, but below is a selection of expenses that are either not maximised by traders or can be tricky to deal with:
Use of home
If you work from home, you will be able to put through a portion of the running costs of your home. It could include household bills such as gas, electricity, telephone, broadband, rent, council tax, mortgage interest, insurance, etc.
Effective structuring of the ownership of vehicles can lead to significant tax savings. Furthermore, you should consider the type of vehicles you’re buying- vans, double-cab pick-ups, gas-guzzlers etc- because they have different tax treatments for capital allowances and benefit in kind purposes.
There are a variety of ways that motor expenses and the VAT on them can be recovered. Furthermore, what records you need to keep will be dictated by what expenses you’re reclaiming.
There are harsh rules about what training costs can be offset for tax purposes if they are for the proprietor (sole trade or partnership).
If you transfer a personal, pre-owned asset to the business, you may be able to obtain tax relief for it.
Family wages has long been an area of abuse by traders, so the rules regarding wages paid to family members have tightened. You may still pay family members wages, but they must actually be doing some work for the business and their wages be physically paid - ie HMRC will want to see a bank payment or receipt of cash paid to them. Furthermore, you should still consider national minimum wage rules, young workers regulations, and tax and national insurance implications etc.
Business entertainment and gifts
It must firstly be stressed, that there is a raft of rules regarding entertainment and gifts. But generally speaking, if you are entertaining anyone other than staff, then the VAT can probably not be recovered and neither is the expense allowable for tax purposes.