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5 small business tax deductions to help reduce costs

Your taxable deductions for your business may not be in the forefront of your mind when you’re busy running your business, but you shouldn’t let them get away from you. We’re going to be listing 5 taxable deductions to help reduce costs for your small business.

 1. Employment Allowance

If your business has employees that are paid via PAYE, then you could get up to £3,000 off your employers Class 1 National Insurance bill each year. It reduces the bill each time you run payroll until the allowance is used up or until the end of the tax year, whichever comes first.

What’s More, you can still claim even if your tax bill is under the £3,000 limit each tax year. However, there are some businesses that don’t qualify including those who run as a PSC (Personal Services Company) working with IR35 rules, businesses that do half their work or more with public services such as the NHS and more.

It’s really easy to claim Employment Allowance and you can do it via your payroll software by entering ‘yes’ into the Employment Allowance field or request this change to your outsourced payroll company.

2. Small Business Rates Relief

If you own a business property that has a rateable value of less than £15,000 you should be able to claim Small Business Rates Relief. This relief operates on a sliding scale so if your business property has a value of less than £12,000 you would pay no business rates.

You can, however, only claim this if you have one sole business property. There are also other forms of rates relief if you’re not eligible for the Small Business Rates Relief, such as Rural Rates Relief if your business property is a protected business i.e. a post office. Or other reliefs such as the Retail Discount which could help reduce your rates bill by a third for the 2020/2021 tax year.

3. Creative Industries Tax Relief (CITR)

If your business operates within a creative industry, there are a range of reliefs that you may be eligible for depending on what you do. Some of the reliefs include:

  • Film (FTR)
  • High-end Television (HTR)
  • Children’s TV (CTR)
  • Video games (VGTR)
  • Animation (ATR)
  • Theatre (TTR)
  • Orchestra (OTR)
  • Museums and galleries exhibitions (MGETR)

To be eligible for any of these reliefs your business would need to pass a cultural test administered by the BFI but if applied to your business can help save between 80% and 100% of qualifying expenditure depending on which creative industry you are in. But note that your business must be liable for Corporation Tax in order to claim this relief.

4. Travel, Subsistence and IOEs

Normal travel to and from a place of business is not deductible however, additional travel for work purposes, is. This includes journey’s to meetings, conferences or professional development workshops, trips to interview new hires and meet with suppliers are all tax-deductible.

The following expenses can be deducted before calculating your Corporation Tax bill provided the expenses are entirely business-related.

  • Air, ferry, train, tube, coach, bus and taxi fares (Including Uber, provided you get a receipt or use an Uber Business account)
  • Car hire, car parking, road tolls and the London congestion charge
  • Subsistence expenses when you’re away from your normal place of work
  • Hotels and overnight subsistence expenses if you have to stay away from home for a business trip (provided you don’t extend your stay to include leisure time or invite your spouse along, which would introduce a duality of purpose and therefore make the stay invalid as a tax deduction)
  • Incidental Overnight Expenses (IOEs): for overnight stays in the UK £5 can be deducted for Incidental Overnight Expenses, such as laundry and dry cleaning, newspapers, phone calls and wifi charges. The IOE allowance increases to £10 a night if the taxpayer is overseas.

5. Accountant Fees

HMRC allows you to claim a tax deduction on some fees that your Accountant may charge you, but not all of them are tax-deductible. If the cost for the Accountants is wholly and exclusively for business purposes then the following can be claimed for.

  • Costs involved in setting up a business you can claim as an expense although these costs are normally very low
  • Company tax return costs as well as financial reports are both deductible and can be counted for within the overall calculation of Corporation Tax
  • Bad debts
  • Advertising
  • Bank charges
  • Workwear
  • Motoring expenses
  • Postage
  • Pension contributions
  • Seminars or events
  • Software
  • Training
  • Subscriptions etc

And many more. As always, make sure that you consult with a professional when looking at your taxable deductions for your business. Hopefully, these tax deductions are something you can do for your business to help reduce your overall costs.

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