Saving money in a business is not just about cutting overheads but making sure you take advantage of all allowances and breaks available to you. It can be hard to keep track of what you can and can’t claim for, especially as the rules change from time to time.
Capital Allowances – What is it?
Capital allowances are financial breaks you can claim for assets that you buy and use in your business. They could include machinery, equipment, business vehicles and so on. You can deduct all or some of their value from your profits before you pay tax.
For small businesses or sole traders with an income of less than £150,000 a year, you could use a simpler system called ‘cash basis’.
Calculating the Value of an Item
In most cases, the value of an item is what you paid for it. For items you owed before you started using it in the business or for items that were gifts, you would use a market value – that is, what you would expect to pay for it if you bought it.
Claiming for Other Costs
You can claim for other things besides business assets including day-to-day running costs, items you buy and sell and interest payments or finance costs for buying assets. For sole traders, these would be claimed as business expenses.
As a company, you may use different machinery or assets to carry out your business such as extracting minerals, dredging, renovating business premises in disadvantaged areas of the country, patents and more. Make sure you know the tax breaks and rules so your business has the advantages it needs.
Are you making the right decisions for your business? If you’re not sure and want to explore what opportunities may exist – then contact me for an initial discussion.
Paul Strachan M. 07793 447961 T. 01307 460667 E. firstname.lastname@example.org