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Top Tax Deductions Small Businesses Often Overlook

Top Tax Deductions Small Businesses Often Overlook

Navigating the world of small business taxation can be complex, especially when it comes to identifying and claiming all eligible tax deductions. Many small business owners miss out on significant tax savings simply because they’re unaware of available deductions. By understanding and utilising these often-overlooked deductions, you can reduce your taxable profit and keep more of your hard-earned money. Here are some top tax deductions that small businesses in the UK frequently overlook.

 

1. Home Office Expenses

If you run your business from home, you may be eligible to claim deductions for home office expenses. This can include a portion of your:

Keep detailed records of your home office expenses and how you calculate the business use percentage to support your claim.

 

2. Vehicle Costs

If you use a vehicle for business purposes, there are several deductions you may be able to claim:

Ensure you keep a logbook to differentiate between personal and business mileage.

 

3. Training and Education

Investing in training and education for yourself or your employees can also be a deductible expense. This includes:

Ensure that the training directly benefits your business to qualify for deductions.

 

4. Subscriptions and Software

Subscriptions and Business-related software and tools are deductible. This can include:

Keep receipts and documentation for all software purchases or subscriptions.

 

6. Client Entertainment

While client entertainment costs are only partially deductible (50% of the expense for food and drink), they can still provide some tax relief. This includes:

Ensure you keep detailed records of the nature of the entertainment and the attendees to support your claim.

 

7. Legal and Professional Fees

Fees paid to professionals for services related to your business can be claimed as a deduction. This includes:

Ensure that the fees are for business purposes and not personal matters.

 

8. Depreciation of Assets

If you purchase significant assets for your business, such as equipment or machinery, you can claim depreciation. This allows you to spread the cost of the asset over its useful life. Key points include:

 

9. Bad Debts

If you have customers who fail to pay their invoices, you may be able to claim a deduction for bad debts. This deduction applies to debts that are deemed irrecoverable. Ensure you follow proper procedures for writing off bad debts and maintain thorough documentation.

 

Conclusion

Maximising your tax deductions can lead to substantial savings for your small business. By staying informed about the various deductions available and keeping meticulous records, you can ensure you’re not leaving money on the table. If you’re unsure about any deductions or need assistance with your tax affairs, consider consulting a professional accountant who can provide tailored advice and help optimise your tax position.

Need a hand with these tips or thinking about teaming up with a reliable accountant? Drop us a message for a no-pressure chat. We’re here to help you get smarter with your business finances and make things easier. Let’s see how we can support your success!

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