Are you missing out on tax savings? Taxes play a big role in business life, but for many, they can become incredibly stressful. Many business owners put off dealing with tax through the year and then struggle to get everything in order when the time comes. The result? A lot of companies are missing out on tax breaks.
“How can I make savings on my taxes?” is a commonly asked question, yet each year, companies miss out on the opportunity for tax breaks and savings. Why? For the most part, business owners don’t realize that there are tax breaks there for the taking — and even if they do, the process can be lengthy and time-consuming.
What kind of tax breaks are out there? How can you save tax
There are many different ways to save on your taxes, but tax breaks are one of the most effective. Take, for example, the research and development tax credit (R&D tax credit). Many companies incur research and development costs, yet very few actually make a claim.
This may be because there is something innately off-putting about the phrase ‘research and development’. Somehow, it conjures images of men in white coats and long hours at the library. However, the phrase ‘research and development’ actually incorporates a vast span of different types of research and development that are relevant to many different types of businesses — maybe even yours.
Under this tax break, companies can claim an enhanced deduction at a rate that will depend on whether they are a large or small-to-medium-sized company (SME). SMEs can claim a deduction from taxable profits of 225% of their qualifying ‘research and development’ expenditure. If a loss was incurred, they are also able to claim a cash payment in return for forfeiting a proportion of their losses.
Does this sound like something you might be eligible for? Contact us today to find out if you have a claim.
3 tips for how to reduce your tax bill if you’re self-employed or a business owner
Whether you are a business or an individual looking to save tax, we’re here to help! Check out our three top tips for saving on tax:
- Make sure you claim all of your expenses
- Monitor your pension contributions, timing of dividend and share transfers. These can save an awful lot of income tax.
- Ask one of our team to conduct an annual personal tax return. You never know what further tax you might be able to save.
Tax payment plans
In 2008, the government introduced the ‘time to pay’ scheme. This was to enable businesses to receive a payment plan on outstanding PAYE/NI or VAT. It was implemented to ease the early effects of the recession. It was a huge success and many businesses who were struggling to pay, and enticed by the cheap debt and low-interest rate, applied for payment plans. After seeing the number of applications to the scheme, the government reined in the applications. Businesses that had previously relied on receiving a payment plan were now refused and it became increasingly difficult to get them.
If you are in this position and you need to receive some flexibility on payments to HM Revenue & Customs to save tax, here are some tips:
- Communication:As a general rule, if you are struggling to pay creditors, the first thing to do is to talk to them. So, if the creditor is HMRC your first step should be communicating with them. However, whenever possible, it presents a stronger case if an accountant calls on your behalf. We would be very happy to deal with HM Revenue & Customs and have a lot of experience in negotiating this kind of matter.
- Know your numbers:You need to know exactly what tax (VAT, corporation tax, income tax, PAYE/NI) is outstanding and how much. Remember: it might not all be outstanding.
- Be prepared:HMRC will often ask if you have tried to get finance elsewhere. This doesn’t just apply to bank loans, but also from family, friends and your own pocket. You need to have a good answer for this.
- Numbers, numbers, again:Numbers are the name of the game. Profit and loss budgets, and cash flow forecasts all need to be presented, so make sure the accountant has this in hand.