Taxcount Ltd

7 Best Tax Tips for UK Small Businesses Owners – Expert Accountant Advice

admin — Wed, 17 Sep 2025 13:55:51 +0000

Running a small business means juggling many responsibilities. Our accountants have compiled the best tax tips for UK small business owners to help you plan ahead, cut your tax bill and stay fully compliant. Whether you’re seeking help with HMRC compliance for small businesses, need a small business accountant near me, or are looking for the best accountant for startups UK, these tips will help you save money and reduce stress before year-end.

Best Tax Tips for UK Small Business Owners - 7 Essentials

1. Use Your Annual Investment Allowance Wisely

If you need to buy new equipment, vans, IT kit or other qualifying assets, doing so before year-end may allow you to claim up to 100% tax relief under the Annual Investment Allowance (AIA). Timing purchases correctly accelerates your tax savings.

2. Pay Into Pensions to Cut Your Corporation Tax

Company pension contributions for directors or staff are usually deductible expenses. Even relatively small contributions before year-end can reduce your corporation tax bill and build your retirement pot. See the HMRC guide to pension contributions and tax relief.

3. Claim All Allowable Expenses – Don’t Miss the Little Things

Mileage, home-office costs, software subscriptions, staff training and professional fees can all be deductible. Keeping digital receipts helps you stay compliant with HMRC’s rules, particularly under Making Tax Digital. For an overview of what counts as an expense, visit HMRC’s guide to expenses for self-employed and small businesses.

This is also where help with HMRC compliance for small businesses really adds value.

4. Consider Timing of Dividends and Bonuses

Planning when to take dividends or bonuses can help you stay in a lower tax band, improve cash flow and avoid unexpected personal tax bills. For official information on dividend taxation, check HMRC’s page on tax on dividends.

5. Use Directors’ Loan Accounts Carefully

If you’ve lent money to the company or vice versa, make sure the account is correctly recorded at year-end. Avoiding an overdrawn director’s loan account can stop Section 455 tax charges. HMRC has guidance on directors’ loans.

6. Review VAT Schemes

Are you on the best VAT scheme for your turnover and industry? The Flat Rate Scheme, Cash Accounting or Standard VAT each have pros and cons. A quick review before your year-end could unlock savings and ensure HMRC compliance.

Explore the different options here:

7. Plan for Making Tax Digital Now

Even if you’re not yet in scope, start keeping digital records. This will make tax time easier, reduce errors and prepare you for HMRC’s upcoming requirements. Read the full HMRC guidance on Making Tax Digital for VAT.

Why Act Before Year-End

Taking action early gives you more options. Once your year closes, you’ve lost the chance to backdate many allowances or expenses. A short consultation now can lead to big savings later. Remember: good tax planning isn’t about paying less tax – it’s about making better business decisions all year round.

Making Tax Digital – What Small Businesses & Landlords Need to Know

admin — Wed, 17 Sep 2025 12:59:41 +0000

Making Tax Digital (MTD) is HMRC’s flagship programme to make tax reporting simpler, more accurate and fully digital. It already applies to VAT and will start to cover income tax from April 2026. If you’re self-employed or a landlord, these changes will affect you sooner than you think.

Who Will Be Affected and When

From April 2026, anyone earning over £50,000 from self-employment or property will need to use MTD. The threshold then drops to £30,000 in April 2027 and £20,000 in April 2028. These thresholds are based on gross income, not profit. That means even landlords or small business owners with high turnover but small margins will be included.

What Will Change Under MTD

Instead of submitting a single annual tax return, you’ll be required to keep digital records throughout the year. Using HMRC-approved software, you’ll submit quarterly updates of your income and expenses. At the end of the tax year you’ll send a “Final Declaration” to confirm everything and make adjustments for reliefs, allowances and any other income sources.

Why Preparing Early Matters

Preparing now will help you avoid last-minute stress, penalties and cash-flow surprises. By moving to digital record keeping early, you’ll get used to new systems, reduce the chance of errors and see a clearer picture of your finances throughout the year. This also makes it easier to forecast your tax bills and plan ahead.

How We Can Help You

We’re already fully set up for Making Tax Digital. We can recommend and install HMRC-approved software, manage your quarterly submissions, and provide hands-on training so you and your team stay compliant. Even if you’re not yet required to use MTD, starting now will save you time later and put you ahead of the curve.

Start Your Digital Journey Today

Making Tax Digital is not just a compliance exercise — it’s an opportunity to modernise your bookkeeping and gain better financial insight. The sooner you act, the smoother the transition will be.

Need help with Making Tax Digital? Contact us today to see how we can make the switch simple and stress-free.

What’s in the Autumn Budget 2024?

admin — Sat, 02 Nov 2024 18:35:55 +0000

The UK Chancellor Rachel Reeves has shared the first budget under the Labour government. There’s a lot of information within the Chancellor’s address to Parliament, and the following list is not exhaustive of all the announcements made.

You can read the full UK Autumn budget on the GOV website.

1.2% increase to National Insurance contributions

From April 2025, there will be an increase to the amount of National Insurance (NI) contributions an employer must make. NI Contributions will increase by 1.2% to a total of 15%, and the National Insurance primary threshold – which is when employers begin to pay NI, will be lowered from £9,100 to £5,000.

Although the NI threshold has been lowered, the amount of National Insurance a business can offset will increase as the employment allowance will change from £5,000 to £10,500. The government claims this change to the employment allowance will result in 865,000 employers paying no National Insurance, whilst over 1 million businesses will pay the same amount of National Insurance as the previous year.

Please note, changes to National Insurance will automatically be applied to Taxcount Payroll, ready for the new tax year.

Freeze on the Income Personal tax threshold will end in April 2028

The Chancellor confirmed that the freeze on income tax and National Insurance thresholds will end in April 2028. From 2028 – 29, personal tax thresholds will be updated in line with inflation.

Changes to the minimum wage

The National Living Wage for workers over 21 will increase by 6.7% in April 2025 to £12.21 per hour, which is worth an extra £1,100 per year for a full-time worker. Meanwhile the National Minimum Wage for 18 to 20-year-olds will go up by 16% to £10 per hour.

Update on business rates

The current 75% discount on business rates is set to expire in April 2025, this will be replaced by a discount of 40% (maximum discount of £110k). In addition there is a plan to introduce permanently lower business rates for high-street retail, hospitality and leisure properties from 2026-27.

Corporation tax

The main rate of Corporation tax for businesses with taxable profits over £250,000 will remain at 25% until next election.

Capital Gains Tax

Capital Gains tax rates for disposal on or after 30 October 2024 will increase from 10% to 18% and the higher rate from 20%to 24%. The rate for Business Asset Disposal Relief and Investors’ Relief will increase to 14% from 6 April 2025, and will increase again to match the lower main rate at 18% from 6 April 2026.

Windfall tax on energy

The energy profits levy applied to oil and gas firms will rise by 3%, meaning the level of tax is now 38%, and this will remain in place until 31 March 2030.

HMRC changes

The interest rate applied will increase on tax that is overdue to encourage prompt payment, in addition there will be an increase in HMRC criminal investigation work by hiring more compliance officers.

Making Tax Digital update

There was a Making Tax Digital (MTD) update within the budget, and the Labour government reiterated its commitment to delivering on the current timeline and expanding the rollout for businesses with an income over £20,000 per year. Rest assured, we’ll be supporting all customers with MTD, and our Director Looqmaan Patel shared “We have been, and continue to, work closely with HMRC on the testing phase, including working jointly on the APIs. This enables us to support our customers in preparation of the changes.”

We hope this roundup has been helpful.

Understanding VAT: A Brief Guide on VAT

admin — Sun, 20 Oct 2024 06:43:00 +0000

What is VAT?

Value Added Tax (VAT) is a consumption tax placed on the sale of goods and services. It is charged at each stage of the supply chain, from production to sale, and is ultimately paid by the end consumer. In the UK, the standard VAT rate is currently 20%, but reduced rates and exemptions apply to certain goods and services.

Why is VAT Important for Businesses

Legal Requirement: If your business’s taxable turnover exceeds the VAT registration threshold (currently £90,000), you must register for VAT. This means you’ll need to charge VAT on your sales and pay VAT on your purchases.
Cash Flow Management: Proper VAT management can help maintain healthy cash flow. Understanding how VAT works allows you to forecast costs and pricing effectively.
Competitive Advantage: Being VAT-registered can enhance your business’s credibility, especially when dealing with other VAT-registered businesses.

How does VAT Work?

Charging VAT: When you sell goods or services, you must add VAT to the sale price. This is known as output tax.
Paying VAT: When you purchase goods or services, you’ll pay VAT to your suppliers, known as input tax.
VAT Returns: Businesses must file regular VAT returns (usually quarterly or annually) to HMRC, detailing the VAT charged on sales and the VAT paid on purchases. You will either pay the difference to HMRC or claim a refund if you’ve paid more VAT on purchases than you’ve collected on sales.

Types of VAT

Standard Rate: The default rate, currently at 20%.
Reduced Rate: Certain goods and services, such as domestic fuel and children’s car seats, are charged at 5%.
Zero Rate: Some goods and services, like food and children’s clothing, are subject to 0% VAT. While no VAT is charged, businesses can still reclaim VAT on related expenses.
Exempt Supplies: Certain services, such as insurance and education, are exempt from VAT altogether.

Tips for Managing VAT

Keep Accurate Records: Maintain thorough records of all sales and purchases, including VAT invoices. This will simplify your VAT returns and ensure compliance.
Understand VAT Categories: Familiarize yourself with which goods and services are standard-rated, reduced-rated, zero-rated, or exempt to ensure accurate charging.
Use Accounting Software: Consider investing in accounting software that automates VAT calculations and helps with filing returns.
Stay Informed: VAT regulations can change. Stay updated on any changes in legislation or rates that may impact your business.

Final Thoughts

Understanding VAT is essential for any business operating in the UK. Proper management of VAT can not only ensure compliance with HMRC regulations but also enhance financial planning and cash flow management. If you have questions about VAT registration, filing returns, or how it impacts your business, feel free to reach out. Our team is here to help you navigate the complexities of VAT!

HMRC Tighten rules to claim PAYE expense claims

admin — Thu, 17 Oct 2024 09:31:04 +0000

Employers can choose to reimburse expenses incurred by an employee. If not reimbursed, the employee can claim income tax relief for allowable expenses from HMRC. These customers can claim this tax relief through PAYE if the amount claimed is up to £2,500.

Recently, HMRC have identified a growing tax risk driven by ineligible claims for employment expenses.

HMRC want to make sure that customers get the tax relief they are entitled to in as straightforward a way as possible. However, they also need to make sure that they identify where customers are not eligible and prevent them receiving payments they are not entitled to.

That’s why HMRC are implementing new evidence requirements for claimants, to respond to the tax risk from ineligible employment expense claims.

New Approach

On 10 June, HMRC suspended processing some claims for tax relief on employment expenses while they considered the best way to manage this risk.

In response, HMRC have decided that they will be changing the PAYE employment expense process for customers.

From 14 October 2024, HMRC will require customers who want to claim PAYE employment expenses to use a P87 form and provide supporting evidence to prove their eligibility before we progress the claim. More information on the types of evidence is under ‘evidence requirements’ below.

HMRC’s aim is to help people get their tax right first time, instead of focusing on correcting issues after they arise. Their want to fix problems at source by taking preventative action to educate and prompt customers towards better compliance.

This approach is built on stopping the ineligible payments going out in the first place through increased checks and changes to processes. This includes educating customers on the consequences of ineligible claims and disrupting the business model of firms that submit non-compliant claims.

HMRC are currently writing to claimants (including agents), whose claims have not been processed since the 10 June, to inform them of this new requirement and to ask them to provide evidence to support their claim.

When customers send HMRC evidence for P87 work expense claims, HMRC will check all evidence and confirm to customers whether they are entitled to tax relief.

Submitting PAYE expense claims

From this date, customers will no longer be able to submit a PAYE employment expense claim using the digital form or make a new claim over the phone. However, customers will continue to be able to use GOV.UK to check they’re eligible to claim employment expenses and to find the P87 form.

HMRC expect that customers making genuine claims will be able to provide this information and submit it to HMRC, alongside the printed P87 form, in the post. Tax agents already regularly submit P87 claims via the post, so it should not cause agents any difficulties.

However, HMRC do recognise that an online claim route is more convenient for customers, which is why they are working at pace to reinstate the digital process as soon as possible. For ‘uniform, work clothing and tool’ expenses, customers will be able to claim these online from 31 October 2024. For all other expenses, we expect a digital claim route to be available by April 2025.

HMRC will keep this updated process under review and will provide a further update in the future.

Wider Work

As well as requesting evidence for employment expenses, they have already implemented other changes to reduce the likelihood of people making mistakes and to make it more difficult for people to try and abuse the tax system.

For example, this activity follows changes HMRC made to the R40 form in December 2023 to require evidence of a PPI claim before they progress a claim for tax repayment.

HMRC have also begun compliance projects looking at employment expenses submitted via Self Assessment (SA) returns. In these projects they will carry out checks on the eligibility of claims, asking for further evidence. Please note that the process for submitting SA employment expenses remains unchanged.

HMRC’s Don’t Get Caught Out campaign reminds taxpayers to check they are eligible before claiming relief on work expenses and raises awareness of the risks of submitting ineligible tax refund claims when using some repayment agents.

HMRC uses a range of civil and criminal powers to tackle dishonest tax agents that cause harm to the tax system. For example, HMRC recently took action against Research and Development tax firms, where their arrested 11 individuals (including some agents) on suspicion of cheating the public revenue and money laundering offences.

HMRC also work in partnership with third parties like the Advertising Standards Authority to report and take down misleading adverts, so people are less likely to be taken in by disingenuous claims of no-risk money.

Evidence Required

Customers must tell HMRC which employment they incurred the expense for, as well as whether their employer reimbursed any of the cost, and if they did, show evidence of how much.

They must also have paid tax in the year that they spent money on the expense that they’re claiming. How much they can claim depends on the rate that they pay tax.

For example, if they spent £60 and pay tax at a rate of 20%, the tax relief they can claim is £12.

Recognise Bad Advice

If someone promises easy money and it sounds too good to be true, it probably is. Handing over your personal information could mean you end up having to pay back the full amount of any invalid claim made on your behalf, including any commission an agent has already taken.

Before using a tax refund company or tax agent for rebates, take your time and do some research. If you choose to use an agent to represent you, you can read more information on GOV.UK about how to choose a tax agent.

Find out what to look out for below (click to expand):

Check reviews from other customers
Read the small print
Watch out for red warning flags

Examples of some of the types of evidence we would expect claimants to provide

Subscriptions to professional bodies

Copies of receipts, or other evidence, that shows how much was paid for each professional subscription claimed.

Mileage Allowance

A copy of a mileage log for each employment. This should include the reason for every journey and the postcodes for the start and finishing points.

Hotel and meal expenses (subsistence)

Copies of receipts that include the date of a stay or a meal, and the name of the hotel or restaurant.

Expenses for working from home

Evidence that the claimant must work from home, such as a copy of their employment contract. If it’s not stated in the employment contract, we need something else that explicitly states they must work from home. If it’s the claimant’s choice to work from home, they can’t claim this expense.

No evidence is required for ‘working from home’ expense claims for tax years 2020 to 2021 and 2021 to 2022 provided that:

employees were instructed to work from home (due to UK government Covid restrictions)
they are submitted within the time limits

Other expenses

A full list of the other expenses that they’ve claimed and the employments they’re for. We also need copies of receipts or other evidence that show the name of the item and that the claimant paid for it.

Uniform, work clothing and tool expenses (also known as Flat Rate Expenses)

We will not require evidence for these Flat Rate Expenses (FRE) claims. However, customers are still responsible for making sure they are eligible to claim FRE. HMRC will still carry out risking to identify customers who may not be eligible to claim FRE. From 31 October 2024, customers claiming these FRE expenses will be able to use our digital claim route. All other types of expenses which require evidence will need to be submitted to HMRC using the post.