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Tax Filing: Reliefs & Allowances

Tax Filing

Tax Filing

It’s crucial for business owners to be aware of the tax benefits and financial perks offered by HM Revenue and Customs (HMRC). This information can help you retain a larger portion of your earnings in a legitimate manner.

It is essential to maintain a good record of your tax obligations and make timely payments. In case of any difficulty in making payments, it’s advisable to reach out to the concerned authorities immediately.

To ensure this, our experts provide you with an overview of the same in this article. So, stay with us!

Tax-free allowances on property in UK

In order to calculate your taxable profit, it is important to take advantage of various allowances and reliefs on tax that may be available to you as a self-employed individual. One such opportunity is to deduct certain business expenses from your annual tax return.

The allowable expenses for tax deduction purposes can be quite extensive and include items such as office supplies, insurance, and bank fees, as well as heating and lighting expenses for your business space, including a home office.

Tax Filing - Research & Development Tax Credits

Your company may be eligible for Research and Development (R&D) tax reliefs if it is involved in cutting-edge science or technology projects. These tax benefits can be claimed by companies who are either conducting research or developing advancements in their field, even if the projects ultimately do not succeed.

Tax Filing - Gift Aid

Corporations and unincorporated associations are eligible for tax benefits for contributions made to charitable organizations that are recognized as such for UK tax purposes.

Tax Filing - Business Rates Relief

Some commercial properties may receive discounts on their business rates from the local government through a program known as “business rates relief.”

Tax Filing - Corporation Tax Relief

Reduce your taxable profits by including the expenses incurred in running your business when preparing your company’s accounts. These expenses can range from purchasing machinery and tools to other operational costs.

You may claim capital allowances for assets purchased for business use, such as equipment, machinery, or vehicles like cars, vans, or lorries.

Tax Filing - Pre-Trading Expenses

If you have recently started a business, you may be eligible to recoup some of the costs you incurred prior to beginning operations through your initial tax filing.

Tax Filing - Reclaim VAT

tax file VAT

If you are a VAT-registered business you can reclaim VAT on items you buy for use in your business. Do this in your VAT return.

In your VAT return, you can recover VAT on items purchased for business purposes. However, if these items are also utilized for personal purposes, you are only eligible to claim the VAT portion related to business usage.

To support your VAT reclaim, it is necessary to maintain accurate records and demonstrate the calculation of the business-related portion of a purchase. Additionally, possessing valid VAT invoices is also a requirement. In the case of reclaiming VAT on goods or services that have not yet been paid for, repayment to HMRC is necessary, referred to as “claw back.”

VAT paid on items or services purchased prior to registering for VAT can be recovered within:

  • Four years for goods that are still in possession or used in the production of other retained goods.
  • Six months for services.

However, it is only possible to reclaim VAT on purchases made for the current VAT-registered business and must be directly linked to the supply of VAT-taxable goods or services.

In some cases, it may be possible to reclaim the full amount of VAT on a new car or commercial vehicle if it is solely used for business purposes, and there is evidence that it is not utilized for personal purposes, such as specified in an employee contract. However, personal use encompasses commuting between home and work, unless it is a temporary place of employment.

In the case of a new car mainly used as a taxi, for driving instruction, or for self-drive hire, it may be possible to reclaim the entire amount of VAT. For used cars purchased for business use, the sales invoice must indicate the VAT.

If a car is hired as a replacement for a temporarily out-of-service company car, typically 50% of the VAT on the hire charge can be claimed. On the other hand, if a car is hired solely for business use and for a duration of no more than 10 days, the full VAT amount can be recovered. Take advantage of the Patent Box to lower your Corporation Tax bill on profits. 

Find out if your company is eligible for a reduced rate of just 10% Corporation Tax on profits from patented inventions and innovations.

Tax Filing - When You Employ Others

You have the possibility of obtaining the Employment Allowance, which gives eligible employers the opportunity to decrease their National Insurance obligation by a maximum of £5,000 per year.

Frequently Asked Question

Self-assessment tax is a system in the UK where individuals are responsible for calculating and reporting their own tax liability to HM Revenue & Customs (HMRC). This applies to individuals who are self-employed, have untaxed income, or receive rental income, among others.

Yes, eligible business expenses can be claimed for tax purposes in the UK as long as they are necessary for the running of the business and have been incurred wholly and exclusively for business purposes.

Yes, there are various tax allowances and reliefs available for small businesses in the UK, such as the small business rate relief, the research and development (R&D) tax credits, and the capital allowances for business assets.

Tax planning and advice refer to the process of minimizing tax liability and maximizing tax efficiency through legal means, typically with the help of a tax professional.

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Tax Filing

Tax Filing: Reliefs & Allowances

Tax filing with a comprehensive understanding of the available reliefs and allowances for businesses, employers, and the self-employed.

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