Posted almost 3 years Ago
Are you a sole trader in the UK looking for legal ways of minimising your tax bill? Do you feel overwhelmed by your tax burden? If yes, then this article has come to your rescue. Paying minimal tax does not have to be an uphill task since there are several legal means of reducing your tax burden. Sounds great? Yes, you can
pay less tax on your profits. There are several tax write-offs that you can enjoy as a tradesman in the UK. Here are the top ten ways of reducing your tax bill as a small business owner in the UK that you need to check out:
Unless you are a finance professional, you will need to hire a qualified accountant to calculate the tax you should pay. In fact, it is advisable to hire one because you can claim back the accounting fees as a tax deduction.
That’s right. If your limited company account has incurred overdraft fees, credit-card charges or you are paying interest on loans, and then count yourself lucky. This is because you can classify such fees as business expenses which will be deducted from your tax bill.
If you use your car or van for business trips either full time or part-time, then you could be smiling when filing your tax returns to HMRC. You will enjoy some tax cuts for the first 10000 miles. Some of the travel expenses that can earn you tax deduction include fuel, insurance, parking, servicing and repairs, breakdown cover and licensing fees.
Books and Magazine Subscriptions
It is crucial to keep up with the latest industry trends and news, so you might have subscribed for a monthly plumbing newsletter or physiotherapy monthly. When filing your tax returns, you will be able to recover the monies used to buy such magazines and books as long as they are related to your trade.
Do you work from your home in the UK and want tax write-offs? If yes, you can claim some of your household expenses against tax deduction. As tradesman in the UK working from the comfort of your home, you can write-off your insurance costs, utility bills and mortgage interest against tax.
As a sole trader, you require at least one computer and other tools that you will use for your trade. The good news is that equipment attracts some tax write-offs. So, you many have many equipment as possible to enjoy these tax cuts. For instance, if you are a plumber you can claim your pipes, water meters and other tools as a business expense for a tax waiver.
Did you know that the money you use to call or text your clients can be used for tax write-offs? Yes, your broadband bill can help you pay less tax. However, it can be daunting to classify personal calls from business calls.
Food and Drink
We all need to drink and eat to live. If you had gone out for business and spent money at a restaurant, then you can use the receipt to claim for tax write-offs. HMRC is tough on such expenses and you have to prove that indeed you spent that money when attending a business meeting or other business missions.
Wearing a uniform is one way of impressing potential clients. Unfortunately, if you work in an office, you cannot go ahead and claim the cost buying a suit. But tradesmen like doormen and builders can claim the cost of repairing, replacing or buying new uniforms. HMRC always has a list of professionals who can seek tax write-offs for uniforms.
Everyone enjoys partying and HMRC is even more generous during the festive season. If you organized a Christmas party for your employees, then you should enjoy tax write-offs for such expenses.
It is crucial for a small business owner in the UK to maintain accurate expenses records for them to enjoy tax write-offs. The trader is supposed to pay tax based on the profits he has accrued from his business operations. HRMC will carry out a self assessment on the sole trader’s business expenses and incomes before accepting their tax returns. Once you are on self-employment, you should notify the taxman, so that you can obtain the self-assessment notice at the end of the period. This article has discussed 10 legal ways of reducing your tax
bill that tradesman in the UK wanted to know.