Top tips for tax savings
SimpleTax CEO, Celso Pinto, shares his top tips for those looking to save money on their tax returns.
Save money with use of home as office
All freelancers can claim at least £20 off their next tax bill. If you’re on the basic rate, you can claim at least £20, and if you’re on the higher rate, you can claim £40. All you need to do is add your home expenses (such as power or internet access) to your self-employment page and it’s done.
Claim your full mileage allowance from HMRC
You can claim over 45p tax free as a mileage allowance if you use your own car for a business journey
Many people don’t realise that if two or more people from the same business travel together, the driver can claim an additional 5p per mile passenger rate for each qualifying passenger
If you run a limited company, put your mobile phone contract into the company’s name
If you transfer the contract with your operator to your business, the business is allowed to give you private use of the mobile without it or you incurring a tax liability
Sole traders can use a mini-cash ISA for savings rather than their business account
You can open a mini-cash ISA and invest up to £5640 per annum. The interest earned grows tax free. Many sole traders use this kind of account to save for their annual tax bill in January and their July payment on account. You can only open one mini-cash ISA per tax year
Save tax by having the correct structure for your business
Many people starting up in business are unsure whether it is more tax advantageous to become self-employed or set-up a limited company. The simple answer is that your best route is linked to your projected profits from the business. All employees, business owners or self-employed people can earn up to £7475 for the year ended 5 April 2012 and £8100 for the current year tax free
Make sure you claim and take full advantage of all allowances and expenses
If you run your own business and your spouse or partner helps out by answering the phone, dealing with paperwork by doing the filing or paying the bills then paying them for this can reduce the amount of tax you pay
Buy new assets just before the end of your accounting period
For example, if your accounts period ends on 31 March, buying a new computer for £500 on that day rather than 1st April, brings forward the tax deduction by 12 months, saving you £100 in tax this year.