By Jamie Wooldridge on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Question:
I am in business as a sole trader and need to purchase a new vehicle. Although I have the funds to purchase one outright, I want to buy the vehicle in the most tax efficient way. Please can you advise what would be the best option. In particular, if I choose to get a vehicle using a PCP, can I treat the entire monthly payment as an expense to reduce profit and hence tax?
Answer:
As a sole trader you have two different options for how you treat any car used in the business. You can either claim ‘simplified mileage expenses’ or claim the actual costs of business usage of the vehicle.
Simplified mileage expenses
As the name suggests this is a straightforward method of claiming for the cost of usage of the vehicle. You can claim 45p per mile of business usage for the first 10,000 miles in any year, and 25p per mile thereafter. It’s worth noting that business mileage excludes travel from home to your usual place of work. Records should be kept documenting the amount of mileage being claimed.
The 45p per mile rate is intended
Tag Archive for Accounts & tax
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Tax savings when purchasing company cars
by Jamie Wooldridge • • 0 Comments
By Jamie Wooldridge on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Question:
I am in business as a sole trader and need to purchase a new vehicle. Although I have the funds to purchase one outright, I want to buy the vehicle in the most tax efficient way. Please can you advise what would be the best option. In particular, if I choose to get a vehicle using a PCP, can I treat the entire monthly payment as an expense to reduce profit and hence tax?
Answer:
As a sole trader you have two different options for how you treat any car used in the business. You can either claim ‘simplified mileage expenses’ or claim the actual costs of business usage of the vehicle.
Simplified mileage expenses
As the name suggests this is a straightforward method of claiming for the cost of usage of the vehicle. You can claim 45p per mile of business usage for the first 10,000 miles in any year, and 25p per mile thereafter. It’s worth noting that business mileage excludes travel from home to your usual place of work. Records should be kept documenting the amount of mileage being claimed.
The 45p per mile rate is intended
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Buying commercial vehicles for tax reasons
by John Miller • • 0 Comments
Originally written by John Miller on Small Business
This is not a simple topic and is dependent on a number of factors, such as the type of vehicle you wish to buy.
As a sole trader, I would recommend buying the car yourself. The benefits of buying a car through your business are limited.
If your company buys a car, and a loan is taken out to purchase the vehicle or if it’s on Hire Purchase, only the interest payments are an allowable company expense.
If you buy a van, buy it through your company. Vans are classified as plant and machinery for tax purposes. As such, they qualify for 100 per allowances under the Annual Investment Allowance regime. This means you get a deduction for 100 per cent of the cost to reduce your company’s taxable profits.
>See also: 8 business van financing tips for your SME
Quirky as it might sound, motorbikes are also not a car, so get the same regime as vans.
Either way, if you’re going to buy, consider buying electric.
With cars and vans, you can charge your company a reimbursement expense of 45p a mile for the first 10,000 business miles that you travel in each tax year and 25p per
Hot Business News Today
Buying commercial vehicles for tax reasons
by John Miller • • 0 Comments
Originally written by John Miller on Small Business
This is not a simple topic and is dependent on a number of factors, such as the type of vehicle you wish to buy.
As a sole trader, I would recommend buying the car yourself. The benefits of buying a car through your business are limited.
If your company buys a car, and a loan is taken out to purchase the vehicle or if it’s on Hire Purchase, only the interest payments are an allowable company expense.
If you buy a van, buy it through your company. Vans are classified as plant and machinery for tax purposes. As such, they qualify for 100 per allowances under the Annual Investment Allowance regime. This means you get a deduction for 100 per cent of the cost to reduce your company’s taxable profits.
>See also: 8 business van financing tips for your SME
Quirky as it might sound, motorbikes are also not a car, so get the same regime as vans.
Either way, if you’re going to buy, consider buying electric.
With cars and vans, you can charge your company a reimbursement expense of 45p a mile for the first 10,000 business miles that you travel in each tax year and 25p per
Hot Business News Today
Cloud and SaaS accounting — what are the advantages?
by Alice Feilden • • 0 Comments
Originally written by Alice Feilden on Small Business
Cloud and SaaS accounting systems are becoming ever-more sophisticated and more widely used. In essence, they are web-based software programmes which users rent or subscribe to. The advent of such services means businesses no longer own the software downloaded on a disk or computer. Instead, subscribers can use the internet to access their financial information.
Small business accounting can be a challenge, but it needn’t be. Below, are five advantages of using an cloud-based and SaaS (software-as-a-service) accounting system for your business:
1. Time saving
One of the benefits of internet-based accounting software is its ease of use. You can set up an account so that information about your finances — including sales, income, purchases and transactions — can flow straight from your business account to your books.
Using desktop-based softwares, from the advanced to the Excels of the world, can be clunky and mean small business owners must manually input bookkeeping data. This can waste time and prove expensive for a streamlined team. With the cloud, entrepreneurs can essentially go ‘hands free’, which means spending less time on repetitive accounting tasks and more time on growing the business.
2. Easy access
The beauty of cloud and SaaS accounting software means
Hot Business News Today
Cloud and SaaS accounting — what are the advantages?
by Alice Feilden • • 0 Comments
Originally written by Alice Feilden on Small Business
Cloud and SaaS accounting systems are becoming ever-more sophisticated and more widely used. In essence, they are web-based software programmes which users rent or subscribe to. The advent of such services means businesses no longer own the software downloaded on a disk or computer. Instead, subscribers can use the internet to access their financial information.
Small business accounting can be a challenge, but it needn’t be. Below, are five advantages of using an cloud-based and SaaS (software-as-a-service) accounting system for your business:
1. Time saving
One of the benefits of internet-based accounting software is its ease of use. You can set up an account so that information about your finances — including sales, income, purchases and transactions — can flow straight from your business account to your books.
Using desktop-based softwares, from the advanced to the Excels of the world, can be clunky and mean small business owners must manually input bookkeeping data. This can waste time and prove expensive for a streamlined team. With the cloud, entrepreneurs can essentially go ‘hands free’, which means spending less time on repetitive accounting tasks and more time on growing the business.
2. Easy access
The beauty of cloud and SaaS accounting software means
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What is the Valuation Office Agency? A guide for small business
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The Valuation Office Agency (VOA) is an executive agency of HM Revenue and Customs (HMRC). Its valuation work covers every domestic and commercial property in England and Wales. It also provides independent and impartial valuation and professional property advice across the public sector. Its valuations help to bring in more than £51bn in revenue in local taxation.
What has the Valuation Office Agency got to do with business rates?
The Valuation Office Agency is responsible for setting a Rateable Value (RV) for every domestic and commercial property across England and Wales. The Rateable Value of a non-domestic property will help determine the business rates payable by the property’s ratepayer. It is a key part of the business rates system – but as an operational agency it delivers its work within legislative and policy frameworks set by HMT and MHCLG. Its role is to provide independent, impartial valuations that support local taxation and benefits. Based on the valuations it provides, local authorities then decide on rates that businesses will be responsible for paying.
How does the Valuation Office Agency value my business*?
Business rates are worked out based on your property’s “rateable value”. This is its open market
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Business rates review 2021 – what your small business can expect
by John Webber • • 0 Comments
Originally written by John Webber on Small Business
We seem to have been waiting to hear the review on business rates for some time. In March 2020, the government announced a new consultation and said that the first part of the business rates review would be published in the tail end of 2020, with the second part in early 2021. Since then the chancellor has announced no less than four delays to publishing its response and we are now waiting until autumn 2021 to learn the government’s full response to the consultation on reform.
>See also: Do I need to pay business rates working from home?
This delay is disappointing, especially since the Treasury Select Committee produced a very credible report with sensible recommendations in autumn 2019, which now seems to have been largely ignored – not to mention all the consultations and reviews we’ve had in previous years. Colliers has long been an advocate of reform and we fear such procrastination will have only meant more job losses across the economy as we wait for a proper redress of the system.
Business rates review 2021 – what to expect
There is no doubt the business rates system needs a radical overhaul. The system that
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Do I need to pay business rates working from home?
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
At the height of the first wave of the pandemic last April, nearly half of the working population were working from home. Since then we’ve had a succession of lockdowns, with the government now encouraging people to stay WFH until July 19 2021 and possibly beyond. But do you have to pay business rates if you’re working from home?
For freelancers, sole traders and the self-employed, not much has changed. But others new to home working will be asking which taxes they do have to pay, including business rates.
Do I need to pay business rates working from home?
You do not usually have to pay business rates for home-based businesses if you:
Use a small part of your home for your business, for example if you use a bedroom as an office
Sell goods by post
You may need to pay business rates as well as Council Tax if:
Your property is part business and part domestic, for example, if you live above your shop
You sell goods or services to people who visit your property
You employ other people to work at your property
You’ve made changes to your home for your business, for example converted a garage into a beauty
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How can I reduce my business rates in England? A small business guide
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
US president Benjamin Franklin famously wrote that nothing in life is certain except death and taxes. However, there are some exemptions/reliefs if you want to reduce your business rates in England, which were first introduced in 1990 as property taxes paid by occupants of non-domestic properties, typically those occupying commercial and industrial premises.
What occupied properties are exempt from business rates?
You also may not have to pay business rates on:
Agricultural land and buildings, including fish farms
Buildings used for training or welfare of disabled people
Buildings registered for public religious worship or church halls
If your property is in England, you can report that you think it should be exempt using the Valuation Office Agency service.
>See also: Do I need to pay business rates working from home?
What exemptions for empty properties can I claim in England?
The government recognises that some premises do not have to pay business rates.
Empty properties
You do not have to pay business rates on empty office and retail buildings for three months. For industrial premises, the period of relief is six months. After this time, most businesses must pay full business rates.
A change of ownership during the three-month period does not trigger a fresh