It’s a new tax year! The perfect opportunity to take steps to improve your tax position.
Doing so can not only help your business save money, it can also help you work in a more efficient way for years to come.
So, let’s get to it! Here are 5 steps you can take to improve your tax position.
Step 1: Submit an R&D claim
If your business is doing work to research or develop an advance in your field, you could be able to make an R&D claim. If you’re working on or have worked on a new process, product, or service, or to improve an existing one, you may benefit from submitting a claim.
It’s worth noting that eligible projects that you can claim for must be innovative, new and not yet available.
As a result of a successful claim, whether you’re in profit or loss, you’ll be rewarded through a Corporation Tax bill reduction, or a cash refund straight into your bank.
Step 2: Explore eco-friendly solutions
If your business has a fleet of vehicles, replacing them with electric vehicles can create a whole host of benefits. Most obvious is the impact on our environment, we all need to do our bit to protect the planet! But did you know there are also tax benefits?
If you lease an electric vehicle, you can reclaim 50% of the VAT on the lease. If the vehicle is bought outright, your business can claim 100% first year allowance (FYA) on the value of the vehicle. This means that the full value of the vehicle can be deducted from taxable profits in the year of purchase.
Cycle to work scheme
You could consider offering a ‘Cycle to Work’ scheme to your employees. This is not only beneficial to the environment, but your team can benefit from tax savings.
Those who wish to participate in the scheme can do so via a salary sacrifice process. Employees can save money on bikes and equipment through tax savings, and employers save money by recouping 113% of costs on employees’ equipment.
It’s worth noting that employees who use their own bike to cycle to work are entitled to 20p per mile, tax free.
If you have your own business premises, you could also explore fitting solar panels.
An obvious benefit is that they can help you effectively reduce your overall energy bill, but that’s not all! The government announced in this year’s Spring Budget, that solar panel installations will be eligible for a possible 5% tax reduction.
Step 3: Utilise your pension
Pensions can be a very tax-efficient way to put money aside for your future as you pay no income tax or national insurance once the money is paid in.
Your business will also get a corporation tax deduction on the money paid in to pension plans.
Step 4: Purchase equipment via your business
This one may sound obvious, but if you’re buying equipment that you’ll be using to run your business, for example a laptop or phone, you should purchase them as your business, not via your personal account.
You can claim tax relief on the full cost the equipment. If purchased via your company, there are no tax or NIC implications.
Step 5: Explore capital allowances
The Super Deduction is in place until 2023 and means that qualifying purchases can benefit from 130% first-year capital allowance and 50% first-year allowance for qualifying special rate assets.
If you decide to make the switch to electric vehicles, you’ll need to install charging points at your office. Good news, those charging points will be eligible for the Super Deduction!
Capital allowances and the Super Deduction apply to many items. The government describes eligible super deduction items as “plant and machinery assets”, we know this may sound like it only applies to heavy machinery and manufacturing equipment, but rest assured it does apply to things like office chairs, desks and computers.
Need more tax tips?
We also offer the Tax Diagnostic Review service! Using this service, we can produce a detailed report that gives you information on all your tax needs, tax saving opportunities, allowances, incentives and reliefs.