Holden Associates – Accountants & Business Advisers Blog

The equation is simple. The more deductions against tax your business can legitimately claim, the lower its taxable profit will be.

What can or cannot be claimed for will be dependent on individual circumstances. Claiming tax deductions can make a big difference to the taxable profits that your business makes. Even this, the most basic of tax planning should never be left to chance.

Did you know that you can claim for the following?

Car expenses

If you use your car for business, or your business owns its own vehicle, you can claim for some of the costs of keeping it on the road. There are two methods of claiming expenses:

Actual expense method. You keep track of and deduct all of your actual business related expenses.

Approved mileage rate method. The approved mileage rate for each mile driven, plus all business related parking fees can be claimed.

If your vehicle is used for both business and pleasure, only the business portion produces a tax deduction. This means that a record must kept of how often you use the vehicle for business and totalled up at the end of the year.

Expenses of starting a business

Once you’re running a business, expenses such as advertising, utility bills, office supplies, and repairs can be deducted as current business expenses.

The start-up costs of a business are also reclaimable, up to six months before for some of the expenditure. Also, reclaiming the tax you may have paid while under PAYE at the beginning of your business can help to considerably reduce how much you have to find to fund your start-up costs.

Training/educational expenses

Training /educational expenses are an allowable tax deduction if they are related to your current business. The expense must be related to the maintenance or improvement of skills required in your present employment; alternatively it can be a legal requirement of the business. Any costs incurred to qualify you to run your particular business are not tax deductible.

Legal and Professional Fees

Fees that are paid to accountants, solicitors or consultants generally can be deducted in the year that they are incurred.  Additionally the cost of maintaining the ‘businesses books’ is fully deductible as a running cost of your business.

Bad Debts

If someone fails to pay your business, this bad debt is deductible from profits.

Tax planning is an important element of your business. I would always recommend that the process of reviewing the tax liabilities of your business should start with professional advice. The tax regulations are complicated and difficult to interpret, even accountants struggle at times. Seeking professional advice can help to add to the long term sustainability of your business.