Ensuring that you are using the full range of tax reliefs available to your business is a key factor in making your business as efficient as possible. We speak to David Redfern, director of DSR Tax Claims, to find out which tax advantages you could be entitled to
In challenging trading conditions it is essential to explore every avenue of business efficiency, including the tax breaks you could be eligible for.
One of the key areas to explore when ensuring your business is as tax efficient as possible is capital allowances, in particular the Annual Investment Allowance (AIA) which allows businesses to deduct the full value of asset purchases from profits before tax.
Most machinery and business apparatus is eligible for this relief, as are certain aspects of your premises. If you have invested in upgrading your outlet, these costs can be deducted from your pre-tax profits but the work done must fit the remit of alteration or significant improvement. General maintenance of the building is not allowable. Where assets are not allowable for AIA, they may still be eligible for writing down allowances, which allows a business to deduct a percentage of the asset value from the profits for each year. This would include any delivery vehicles that your business may own.
Aside from treating your business assets effectively, you could also benefit from other areas of tax relief. If your outlet employs staff, whether at the counter or in other roles, you can claim Employment Allowance to lower your Class 1 National Insurance bills by up to £3,000 per year. This is a simple tax relief to claim through your payroll software – all you need to do is tick ‘yes’ in the 'Employment Allowance indicator' field next time you send an Employment Payment Summary to HMRC.
Depending on the value of your premises, you could also be entitled to Small Business Rate Relief, which could see your business rates reduced to zero if the rateable value of your premises is less than £12,000, then increase on a sliding scale up to a rateable value of £15,000.
This is a key area of relief for independent fast food operators because it is only available to those businesses with only one set of business premises. You will need to contact your local council to claim this relief. However, even if you aren’t entitled to claim this rate relief, if your business property has a rateable value of £51,000 or less, your rates bill will be calculated using the small business multiplier, which is still lower than the standard one.
Don’t forget, as a small business operator, you will be entitled to deduct your business expenses from your profits before you calculate your Corporation Tax (or Self Assessment tax bill, if you are a sole trader or partnership). These don’t just include the usual expenses you might expect as an independent fast food retailer, such as food and packaging expenses, uniforms or energy costs, but also hidden expenses such as bank charges and insurance costs. In most cases, as long as the expense was ‘wholly and exclusively’ business-related, it is a deductible business expense so it’s good practice to keep your receipts and invoices in good order.
David specialises in identifying allowable expenses. He can be contacted on 0115 795 0232. Alternatively, visit www.dsrtaxclaims.co.uk