Don’t let tax be at your own expense

Partner Kevin Brevitt from the Leamington office of Midlands accountancy firm Baldwins, reveals how local businesses can reduce their tax bills.

“There are a number of reliefs and allowances which can reduce your tax bill. If you run a business or are self-employed you are legally entitled to claim back tax on any costs associated with running your business not just for this year, but for the past four years,” explains Kevin.

“Often people aren’t aware of all the costs you can claim back which could cost thousands of pounds each year. In Leamington and the surrounding areas for example there are hundreds of B&Bs and small hotels to serve the thousands of visitors we get all year round. These small businesses must spend a considerable amount on running their businesses especially on electricity bills, gas bills, maintenance costs and goods required – all of which are classed as business expenses and can therefore be claimed against. Other common expenses include accountancy fees, travel, insurance, postage, uniforms and wages.

“However businesses can also claim against ‘capital expenditure’ which is not as well known and our clients are often surprised at how extensive the list of capital items is. This covers one-off costs to buy or improve something you need for your business and can include buying new premises; machinery such as farming or agriculture equipment; IT costs such as a new computer or new fixtures and fittings such as furniture, en-suite sanitary ware, shelves, plumbing or lights. Claiming against these will most definitely reduce your tax bill, although you will need to show them separately on a self assessment return form. There are certain rules and regulations which can get a little confusing – although you must be able to show that the capital expenditure was spent because of the business, you can still get some private benefit from the spend if it was incidental.

“What you can’t claim for is personal items or items not directly associated with the business, or items for both business and personal i.e. a car. However, if you can separate out the two uses and clearly show that one side was for business, you may be able to claim.

“There are various ways we work with clients to help them claim. For some we do an initial visit free of charge to see what could be charged for in the form of an itemised list and we’ll then agree either a fixed fee or a percentage of what we can claim back.

“Because there is a time limit on claiming back, we would advise businesses who haven’t done so already to look back over the last four years and see if it’s worth making a retrospective claim. This way you’ll make sure the money stays in your own pocket rather than going into HMRC’s.”