As a small business owner you would only want to pay as much tax as you are legally obliged to pay, and no more!  There are a number of ways that the tax rules can help to ease the burden for small business owners in these testing times.

Tax help, good financial planning and tax advice from an independent financial adviser is essential to find a tax saving scheme to suit your circumstances.

Below are some examples of tax savings:

If you are self-employed and your spouse helps out with general administration, or any other role, it is quite legitimate to pay your spouse a salary. Just follow sensible commercial rules and you will have no problem with the Inland Revenue. In particular pay a market rate for the type of work done and number of hours worked. Sole traders with higher rate tax liabilities will benefit significantly from this arrangement.

A tax deduction for the cost of buying office furniture, computer equipment and other tools is given by capital allowances. If you buy a computer or other item of equipment which may have a life of four years or less, it may be worthwhile making a ‘short life asset’ election when you claim capital allowances. This will mean that you get tax relief for the full cost of the item much more quickly in the event that you sell or scrap it within that period.

If you are thinking about replacing your business vehicles, this is worth bearing in mind that tax relief for cars with emission levels below 120mg/km is given more quickly than for other less environmentally friendly cars.

Payments into a pension scheme qualify for tax relief.  For more information see our web pages under the heading small business, staff benefits and pensions advice.

Make sure that you claim your entitlement to the Small Business Rate Relief. This is a new relief, introduced from 1 April 2005, which allows small businesses a reduction of up to 50% of their full charge for rates.  Again see our web pages on the subject. Small business, business tax planning and IHT.

If you use your home for business purposes, then you will be able to claim a deduction to cover part of your home running costs. This will often be a deduction of between £2 and £10 per week, although larger amounts will be allowed if they can be justified.

For many of our clients whose small business’s have made good profit we offer many tax planning opportunities in conjunction with a number of specialist chartered tax advisers.

The minimum plans are set at levels of around £100,000 and involve the use of offshore trusts, but result in significant tax savings.  Many of the plans can be insured against the risk of challenge by the revenue.

There are many other tax savings you can make as a small business owner so obtaining to the correct financial advice and tax advice from a qualified financial planner will enable you make the most of the tax savings available.

Any questions on tax savings?

Please call us on 01582 839280 or email us.