This is not tax advice, nor a comprehensive view of all tax issues, but in considering the tax issues relating to your business and insuring you keep out of the way of an HMRC tax investigation there are numerous tax reliefs and incentives available and a selection of these follows below.
Naturally these will depend on your own particular circumstances and it is vital that your advisor provides proactive, positive advice.
Identifying the most Suitable Structure from a Tax Perspective
This might be trading as a sole trader, a partnership or a limited company. The tax liabilities vary accordingly as do the running costs. If in doubt, you can start as a sole trader and incorporate later in your business’ development.
What is Tax Deductible?
The basic rule is any expense incurred wholly and exclusively for the benefit of the business. Always try and obtain and retain the supporting evidence.
Claiming Capital Allowances
Some expenditure will be of a capital nature, e.g. furniture, fixtures and fittings and these may be eligible for 100% relief.
The allowances for cars has just recently changed in the last budget and is restricted but low Co2 emissions may still qualify for up to 100% relief.
Research & Development (R&D)
Basically, the claim must be of something “different” not necessary innovative or technologically advanced which will then enable extra tax relief or even a refund!
VAT Yes or No?
It is not compulsory to register for VAT at the outset of the business. Only when your turnover reaches the current (at the time) level over a twelve-month period, does it become mandatory to register for VAT.
However, if your customers are most likely to be VAT registered then there will be a cash flow benefit in requesting a voluntary registration which will enable tax to be recovered. There are various different schemes in place depending on your industry or circumstances and you should consult your advisor on the best one for you.
Other Potential Allowable Items
If you are carrying out any work from home then a proportion of household expenditure often covered by a suitable round sum allowance can be claimed.
If other members of your family are assisting in the business then it may advantageous to pay them a salary.
Incentives for Investors
If your business structure is a limited company and you are seeking investors, then they should consider the attractive incentives through SEIS and EIS.
Like everything else there are conditions to meet but these schemes are very popular.
National Insurance Credit
A relatively new incentive is the credit of £3,000 per annum against National Insurance incurred for employees, which can include the owners.
The above is not exhaustive and changes to the legislation occur in the regular bi-annual budgets but hopefully for the start-up the above ideas offer you an incentive to your way forward. If you would like more information on the above or any other tax issues do not hesitate to contact me via this link >>>
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