Tax Deductions for Small Business Owners

    As a business owner, you are responsible for ensuring that your business pays the right amount of tax to HMRC. However, there are plenty of legitimate tax breaks that you can take advantage of. Running a business means you should take great care to include all your deductible business expenses when filing your tax return. Here are some great ways that you can keep your business as tax efficient as possible.

    First of all, using a free VAT calculator like this – Add VAT Calculator | Remove VAT Calculator can be an invaluable tool when it comes to working out your taxes, making sure you have paid the right amount and are taking enough off your taxable income. This can mean the difference between a tax rebate and a tax bill!

    Your home office expenses

    If you regularly work from a home office, then you may be able to claim a tax deduction of £4 a week without even having to provide an itemized bill or receipts or any other documentation to HMRC. If your office costs are significantly higher than this then you can claim larger deductions as long as the business element of any variable expense can be clearly defined and separated – for example, calculating what proportion of your property is allocated for business use and how many hours the room is used for such purposes and adjusting the utility costs accordingly.

    Phone and broadband

    If you use a landline in your business then you can claim on specific business calls but any other charges such as the cost of line rental, cannot be claimed. However, if you have a specific office landline then it may be fully tax-deductible provided the bills are issued to the company rather than the business owner. This also applies to mobile phones – the full cost of the phone contract is tax-deductible if is it in the company’s name. Again, broadband fees are fully tax-deductible if the account is in the company name and any private use is kept to a reasonable minimum.

    Plant and machinery costs

    Plant and machinery costs for small businesses include any computing, manufacturing, and office equipment such as computers, printers, software, office desks and chairs etc. You can deduct the cost of these items as long as they are purchased in the company name and all the invoices or receipts are retained to prove this.

    Business Mileage

    If you use a privately owned vehicle for business-related travel, then you can claim a specific amount per mile as a tax-deductible expense. This does not apply to travel to your normal place of work such as heading to the office. At the moment business mileage allowance is calculated at a rate of 45p per mile for cars and vans, 24p for motorcycles and 20p for bicycles. Check out the government website to find out more.

    Magazine subscriptions, professional journals and business books

    As long as a book, journal or magazine is relevant to your business’ trading activities then you can usually claim it as a tax-deductible expense.

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