Sensible tax planning measures can reduce your liabilities and help you to keep more of the money you earn. Here are six simple things that should be part of a business-owner’s routine thinking about tax...

1. Choose the best structure for your business
   Choosing the most suitable structure for your business can have a significant impact on the amount of tax that you are liable to pay, and each trading structure has its own advantages and disadvantages. While it may be beneficial to operate as a sole trader or partnership in the early years, as your business becomes successful and profits increase you may wish to consider trading as a limited company. Making the right choice as to whether to trade as a sole trader, partnership or limited company will benefit your business in the short, medium and long term, so do contact us to discuss your individual circumstances.
2. Profit from any losses
   It may be possible to turn losses around and carry them forward to use against any future profits. Alternatively, you could set them against other sources of income in order to obtain immediate relief.
3. Claim tax deductible expenses
   Delays in expenditure may not necessarily be in your business’s best interests. Generally, it is better to incur expenses just before the end of your accounting year, rather than after, as you will be able to obtain relief for those expenses one year earlier.
4. Utilise capital allowances
   Through the process of reviewing your capital expenditure, you may be able to maximise any claims you wish to make for capital allowances. Many businesses are now able to claim a 100% Annual Investment Allowance (AIA) on the first £200,000 of expenditure for most types of plant and machinery, excluding cars, with effect from 1 January 2016 (transitional rules apply). The AIA applies to businesses of any size and most business structures, but there are provisions to prevent multiple claims.
5. Reclaim input VAT on any petrol usage
   If you reimburse employees who pay for their own fuel for business travel purposes, you could reclaim the VAT applicable to the deemed fuel element of the mileage rate. Employees must, however, submit a valid VAT receipt before any VAT can be claimed.
6. Review your business motoring
   It might be worth conducting a review of your business motoring arrangements, as the company car may not be the most tax-efficient option for your business. Where a company vehicle is still appropriate, in some cases a van may prove to be more beneficial to your business’s finances. Company vans give rise to a £3,170 taxable benefit for unrestricted use. Additionally, a further £598 of taxable benefit is available if fuel is provided by the employer for private travel purposes. However, limiting the employee’s private use of the van only to home-to-work travel may potentially reduce these figures to zero.