It is fair to say that very business owner is interested in saving tax. Luckily, there are many simple, honest ways of doing so, some of which not only help your business, but the environment too.
Below you can browse a variety of tax saving tips that every business owner should be aware of!
Since the difference could be going back into your business, ensuring it’s strength and growth, what have you got to lose?
If you are an employer who provides social functions and parties for your employees, you are entitled to a certain amount of tax exemption.
If you are an employer who is not providing this, then perhaps you should ask yourself why. After all, such gatherings are a tax deductible expense, not to mention a great way to boost morale and bring your team together.
You do not have to pay tax or National Insurance on staff parties/social functions, or report them to HMRC, if they meet the following criteria: the cost is less that £150 per head; it is an annual occurrence; and it is open to all of your employees.
If your business hosts multiple social functions annually and their combined cost is below £150 per head, then you are still exempt.
You do not have to report the amount per head if it is part of a salary sacrifice arrangement.
As you will be aware, the severity of the coronavirus pandemic means that parties and social functions are on hold for the foreseeable. To bring some cheer this year, why not give your employees a trivial benefit to replace your Christmas party?
When Paying an employee a trivial benefit, you are not required to pay tax or National Insurance, or to let HMRC know.
Trivial benefits, as distinguished from regular benefits, must meet the following criteria: it cost you £50 or less to provide; it isn’t cash or a cash voucher; it isn’t a reward for their work or performance; it isn’t in the terms of their contract.
To be clear, you must pay tax on any benefit that do not meet ALL of this criteria. It is also important to note that you can’t receive trivial benefits worth more than £300 in a tax year if you’re the director of a ‘close’ company, which is a limited company that is run by 5 or fewer shareholders.
Moreover, if the trivial benefit is part of a salary sacrifice arrangement, then it is not entitled to a tax exemption.
Ultimately, trivial benefits are a tax efficient way of saying thank you to your employees for their continued loyalty towards your business!
As an employer, if you offer bikes- lent or hired- to your employees, it does not count as an expense or a benefit. This means that you do not have to deduct or pay tax or National insurance on them, or report them to HMRC.
The effects of implementing this scheme are astoundingly positive, not only in terms of tax, but the health of your employees and the environment at large!
To find out more about this particular tax saving tip, read our blog post, Employer's Guide to the 'Cycle to Work Scheme'.
Electric is the future. There are various tax incentives in place for making more environmentally friendly, carbon reducing decisions when it comes to your business and how it operates.
This includes enhanced capital allowances for energy and water efficient equipment and incentives for the use of electric cars.
Read our blog post about going electric for more information.
Besides electric, investing in assets is another tax efficient way of improving your business.
You can claim capital allowances when you purchase assets that you use for the function of your business, e.g. machinery.
In regards to these assets, you are able to deduct some or all of the value of the item from your profits before you pay tax.
For more information of the terms of the these allowances, read our blog post about capital allowances for asset investment.
Contact Gow & Partners for expert advice on all tax related issues.
Call 01254 589799 for a chat, or drop us an email at email@example.com.