smallbusiness.co.uk: Helping your business think big

Even though the deadline for tax returns is just weeks away, there are still ways to shrink your tax bill.

Whether you’re thinking about starting out or filing a tax return for the first time, exemption claims can help alleviate some of your tax-related costs. Capital allowances come in a range of forms and are an expense you can charge against the profits of the business.

Development deductions

First of all, there’s good news for anyone who has invested or is thinking about investing in plant and machinery. From the tax year 2008/09, a new 100 per cent annual investment allowance has became available for the first £50,000 of expenditure. Anything in excess of this amount qualifies for a 20 per cent capital allowance.

Building benefits

Money spent on renovating or converting space above shops and other commercial premises can also help fortify your finances. You can usually claim 100 per cent of the cost of converting a property into flats or renovating unused business premises in a disadvantaged area. For more information visit the HM Revenue & Customs (HMRC) website.

Fuel savings

Driving down the cost of running vehicles is another option. Benefits available here depend on the type of business format you have adopted (for example, whether you are registered as a sole trader or a limited company).

You will either be able to either take private vehicles into the business and charge the business a percentage of the running costs and the capital allowances against tax, or charge business use at a rate of 40 pence per mile. A guide is available on the Business Link website.

Technology relief

Finally, research and development (R&D) tax relief is an aspect of expense you can’t afford to ignore – particularly as it could result in substantial savings. If you have invested £10,000 in certain types of technology you could be eligible for enhanced tax relief, or money back in tax credits if you are a loss-making company. More information on how to claim money back in this way is available on the SmallBusiness blog.

No matter what the format of business, you will need to make returns to HMRC. So ensure you keep a record of payments for goods and services as well as the business’s takings through the till.

And for those of you in the process of filing your tax returns now, all the best for the 31 January deadline.

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