P.P.P.P.S.  Here Are 28 Money Saving Tax Tips For Self Employed People!  Hope They Help You!

The tax tips are for guidance only and are believed to be correct. However, we strongly recommend you speak to your accountant before taking any action based on this information.

Information and figures are subject to change, we cannot be held responsible for any consequences as a result of acting on these tax tips. 

1. Set up a separate checking account for your business activities: One of the biggest mistakes entrepreneurs make at the beginning of their business is to pay for business expenses (letter head, office supplies, equipment, etc) from their personal checking account and with personal credit cards.
   
   
2. Keep careful records – apart from the legal requirement, it could help you pay less tax. Note down all the expenses you could claim if you are self-employed or if you let out property.
   
   
3. Don’t be late sending in your tax return if you want to avoid an automatic £100 penalty.
   
   
4. Payments on account are based on last year’s tax bill. If you expect your income to be lower this year or your allowances and reliefs to be higher, you can make reduced payments.
   
   
5. Investigate the past. It may not be too late to claim an allowance or deduction you have forgotten about.
   
   
6. Think about giving quoted shares, land or buildings to charity. You will get income tax relief at your highest rate of tax and there’s no capital gains tax on the gift.
   
   
7. If you are both employed and self-employed, or you switch from being an employee to self-employment (or vice versa) during the tax year, you may pay too much in Class 1,2 and 4 National Insurance contributions. Claim a refund or ask to defer some payments until the position becomes clear.
   
   
8. Many small businesses (with profits up to £50,000) a year can still save tax by operating as a company rather than as a sole trader or partnership.
   
   
9. You can still claim as an expense for your business something you use partly for business and partly in your private life, for example, using your home for work, sharing the car.
   
   
10. If your turnover is less than the VAT threshold, you can opt to use Inland Revenue authorised mileage rates as a basis for claiming car expenses. This saves some record-keeping and saves tax if your actual expenses would be less.
    
    
11. Small and medium-sized businesses qualify for 40 per cent first-year capital allowances on spending on plant and machinery.
    
    
12. You may be able to claim a 100 per cent capital allowance in the year you buy new energy-saving or water-saving equipment for your business.
    
    
13. When you first start your business, claim capital allowances on any equipment you already own but take into the business, for example, a car, desk and so on.
    
    
14. You do not have to claim all the capital allowances you are entitled to. It may save you more tax to claim less and carry forward a higher value to the next year when your profits may be higher or your personal allowances lower.
    
    
15. If you are married and run your own business, consider employing your spouse if his or her tax rate would be lower than yours. The salary paid to your spouse must be in line with the work done.
    
    
16. If you make a tax loss in your business, there are several ways this can be used to reduce tax on other income or gains. Losses may also increase the amount of tax credits you can claim.
    
    
17. Following a test case, where working from home uses furniture and equipment normally found in a home, there is no breach of residential use and business rates are not due. However, structural alterations, hiring staff, using specialist equipment and customers visiting your home-business could justify a charge for business rates.
    
    
18. If your profits are low, think twice before deciding not to pay Class 2 National Insurance contributions. At only £2.10 a week, they are a good value way of building up rights to state benefits such as retirement pension and incapacity benefit.   Whether interest on a loan counts as an allowable expense depends on how the money is used not its source. Instead of overdrawing your business account or getting a business bank loan, a cheaper option might be extending the mortgage on your home. The part of the interest relating to business use is allowable and the Revenue assumes repayments pay off the personal debt before the business part.
    
    
19. Work on a let property or business premises that once counted as an improvement (capital expenditure) may due to technological advances now be accepted as a repair (allowable expense) – for example, replacing old windows with double glazing. If you are replacing an old feature with a modern equivalent, try claiming and ask your tax office to confirm that the expense is allowable.
    
    
20. Try to use the tax-free allowance for capital gains tax every year – you can’t carry over unused allowances to other years. Think about selling some shares showing a profit and buying them back within an ISA to make a gain that uses up the allowance or choosing investments designed to produce a capital gain on a set maturity date.
    
    
21. You can claim a 100 per cent capital allowance on the cost of converting space above shops and businesses into flats.
    
    
22. If you own a small business, take professional tax advice on inheritance tax. There are extensive tax reliefs, which can mean you pay little or no capital gains tax or inheritance tax, but they need careful planning.
    
    
23. The revenue has the power to start 'enquiries' and do not have to give you a reason for looking in to your tax affairs.  That means you better use your Account-Able system!  
    
    
24. Tax Returns - For the tax year ended 5th April 2008 all personal tax returns will have to be submitted by 31st October rather than the existing 31st January of the following year, this measure will have a significant impact on Accountants and their clients.
    
    
25. Capital Allowances for Small Companies - Increased to 100% for up to £50,000 per year of expenditure from April 2008.
    
    
26. In 2008 Personal Allowances increased to £5,435 (£105 per week). 10p rate of tax abolished. Basic Rate remains reduced to 20% from April 2008. Higher rates tax kicks in once total earnings reach £41,435.
    
    
27. VAT Threshold & Rate – In 2008 vat registration threshold increased to £67,000. No change to the rates of VAT announced.
    
    
28. Self Employed National Insurance – In 2008 Class II National Insurance raised to £2.30 per week.
    
     

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