Business owners are obliged to ensure that they are paying exactly accurate amount to the HM Revenue & Customs, but it doesn’t mean that they can overlook legal tax breaks or can ignore tax deductions which are mandatory for business.

In this blog, we are presenting 6 ways that can assist accountants to help savvy small business owners, assuring their business is tax-efficient to the way possible.

Home Office Expenses

Small business owners who continuously work from a home office are eligible to request a small tax deduction of £4 a week without giving any itemised bills, slips or documentation.

In case, if home office of a director costs higher, then larger deductions can be claimed, the variable expanses of a business should be clearly explained and separated out including property/portion being used for the business, hours of usage of that room/place used for business purpose, other utility costs including energy and water.

However, fixed expenses for director of limited companies remain unchanged. These taxes include rent, council tax and mortgage interest and such taxes are not eligible to be claimed as a tax deduction.

Additionally, in case, if a director has his own property/house and he uses the room that is fully exclusive for business purposes then there would be a risk for director to lose his privilege for Private Residence Relief on that particular portion of the house. As a consequence, the director will need to pay a potential capital gain tax when the property is sold.

How Much Does It Worth?

In London, for the typical small business, a weekly allowance of £4 for home office means a tax saving of £41.60 per year

Telephone Expenses

Suppose, if a home business owner make business calls through his landline phone then the cost of business calls are tax deductible. However, all other charges including the line rental cost of the landline will not be eligible to be claimed for a tax deduction.

In case, if a small business owner uses an office landline at his work place then it is fully tax-deductible but the bills should be issued to the company instead of the business owner.

Also, if a mobile phone contract is issued by the company’s name and any person is using it reasonably then complete cost of phone contract will be tax deductible.

In case, if a company is using a broadband account without any private use then broadband fee will be tax deductible.

How Much Does it Worth?

In London, a regular small business can take the advantage of £120 per year by issuing their broadband bills and mobile phone contracts with company’s name.  (Based on a monthly broadband fee of £30 and mobile phone costs of £20 a month).

Plant and Machinery Cost

Small business owners are also eligible to claim tax deductible cost of the plant and machinery they are using. These cost includes, office equipment, manufacturing, computing, printers, fax machines, computer software, chairs, desk, scanners. A company can show its invoices and receipts as prove while calculating its Corporation Tax bill.

How Much Does it Worth?

A regular small business in London, hardly utilises its £200,000 Annual investment allowance. Small business can have more tax saving with a total of £320 (based on the cost of MacBook buying with a printer and other business software).

Travel, Subsistence and IOEs
Small business owner, who owns or rents an office, studio or any other factory or workshop, their travel for this place is not tax deductible.

However, any sort of business travel apart from your normal travel, like traveling for client meetings, traveling to conferences or other professional traveling including meeting with suppliers etc can be deductible for Corporation Tax bill.

How Much Does It Worth?

A small business in London can save £480 annually with these tax deductions. However, it is based on the two offsite client meetings in London per week with maintenance expenses, plus one overnight short business trip each year with maintenance expenses and Incidental Overnight Expenses.

Business Mileage expenses

In case, if a small business owner is using a vehicle that is privately-owned then he can claim a particular amount (per mile) as tax deductible expense. In addition, travelling expense for non-official place is not included.

How Much Does It Worth?

As per BBC, the average business mileage stands to 700 miles in the UK annually, representing a tax saving of £315 a year.

Magazine subscriptions, professional journals and business books

The cost of business book, magazine or journal is usually tax deductible. Moreover, if any company have clients in the adult entertainment or automotive industry then the subscription cost will not be deductible.

How Much Does It Worth?

A number of small business owners fail to claim their business books, magazines and journals tax deductions.  This can help them to receive a tax savings of £80 annually.

If you need further information relevant to other tax policies or tax deductibles then you can contact Certax London. We would also like to help you with online accounting, tax, payroll and vat services.


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