Beginners guide to business tax deduction

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Every business owner wants to save tax, which is why you should set aside time to fully investigate the many possibilities for your own contracting business. If you’re a beginner to the world of contracting, you may be missing out on opportunities to slash your tax bill.

When you’re self-employed, your business will have various running costs – some of which can be deducted, as long as they’re allowable expenses. Here we will look at a few simple ways in which you can reduce your tax bill as a contractor.

 

Familiarise yourself with VAT

VAT causes much confusion and missed tax-saving opportunities among business owners. If you do pay VAT, consider whether you are paying the appropriate amount and look into the VAT Flat Rate Scheme, which involves paying a fixed rate of VAT to HMRC and keeping the difference between what you charge to your client and pay to HMRC.

The VAT Flat Rate Scheme can be an unexpected source of profit, enabling contractors to save as much as £8,000 per year.

Base your business at home

Although most contractors have to spend a portion of their time in an office, many have the opportunity to work from home. Although you may decide against working from home due to its tendency to blur your personal and professional lives, there are generous tax savings to be gained from doing so.

When you’re a self-employed business owner working from home, you can claim a proportion of a wide range of home costs including Council Tax, mortgage interest, heat, light, insurance, water and phone expenses, as well as general household maintenance and repairs.

Deduct the costs of travel and subsistence

If you travel to and from the office as part of your job, you can deduct tax from the costs that you incur. This includes journeys related to your business, such as for meetings, business trips and training courses.

Costs for bus, train, taxi and air fares can also be deducted against your profit, as can parking and toll costs. Furthermore, subsistence expenses (such as those associated with lunch when you are out) also count, as do hotel and meal costs when you are required to stay away from home.

Voice your concerns to a professional

Tax is a complicated area, so it is vital that if you are unsure about anything, you discuss it with a trained professional. Associate Services offer highly rated standard accountancy services such as monthly payroll, bookkeeping, accounts, VAT and tax, which allows you to explore all of the possibilities for your business to save tax in a legally compliant manner.

Running your own business or contracting is an incredible opportunity to be the master of your own time and earnings. Don’t let worries about business tax prevent you from enjoying your contractor or freelancer lifestyle. Contact Associate Services for the benefit of extensive professional experience – it could help to make an immense difference to your annual tax bill.

Source: Associate Services

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