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How Entrepreneurs can plan for Tax Season: Key deductions and credits

Tax season can be a stressful time for entrepreneurs and it's crucial to stay ahead of the game and make the most of the tax deductions and credits available. Effective tax planning not only ensures compliance but can significantly enhance your business's financial health. Here are essential strategies and tips to help entrepreneurs maximise their tax benefits.



Understand Your Allowable Deductions

A thorough understanding of allowable deductions is vital. Common deductions for entrepreneurs include:

 - Office Costs: You can deduct expenses for your office, including rent, utilities, and office supplies.

- Travel Expenses: Costs associated with business travel, including mileage, accommodations, and meals, can be deducted.

- Marketing and Advertising: Money spent on marketing and advertising is fully deductible, a crucial aspect as it drives business growth.

- Legal and Financial Fees: Professional fees for lawyers, accountants, and business consultants can be deducted.


Make Use of Capital Allowances

Capital allowances are another way to reduce your taxable profit. They apply to assets you buy and use in your business, like equipment, vehicles, and machinery. Understanding how to claim these allowances can significantly lower your tax liability.


Claim Research and Development (R&D) Relief

If your business is involved in innovation, you may be eligible for R&D tax relief. This relief can reduce your tax bill or, for some small or medium-sized companies, provide a tax credit. This includes developing new products, processes, or services or enhancing existing ones.


Utilise Entrepreneur’s Relief

Entrepreneur's Relief now known as Business Asset Disposal Relief, can significantly reduce the capital gains tax on the sale of your business, up to a lifetime limit. Planning for this relief can lead to substantial tax savings upon exiting your business.


Consider VAT Planning

Understanding and effectively planning for VAT can lead to significant savings, especially if you ensure you're on the most beneficial VAT scheme for your business size and type. Options include the Standard Rate, Flat Rate, or even the Cash Accounting Scheme.


Leverage Pension Contributions

Contributions to your pension can be an effective way to reduce taxable income. These contributions are tax-free up to a certain limit and can form a crucial part of your retirement strategy while optimising your current tax liabilities.


Plan for Your Personal Tax

As an entrepreneur, personal and business finances can often intersect. Ensure you are also optimising your personal tax situation, including the use of ISAs, Capital Gains Tax allowances, and income splitting strategies where feasible.


Conclusion

Tax planning should be an integral part of your business strategy, not just an end-of-year scramble. At Oakmere Wealth Management, we specialise in helping entrepreneurs like you navigate the complexities of tax season with strategic planning that aligns with your broader financial goals. By taking a proactive approach to tax deductions and credits, you can enhance your business's profitability and sustainability.


Ready to optimise your tax position? Contact Oakmere Wealth Management today to discuss how we can tailor a tax planning strategy that helps your business thrive.


The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select, and the value can therefore go down as well as up. You may get back less than you invested.


The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief generally depends on individual circumstances.

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