Nine Practical Ways Sole Traders Can Cut Their Tax Bill

Running your own one-person business means you wear a lot of hats — including the taxman’s. But a few well-chosen moves can make a real difference to how much you hand over each year. Start with the basics: check whether your premises qualify for Small Business Rates Relief. In England, properties under a rateable value of £12,000 don’t pay business rates at all, and those between £12,001 and £15,000 receive a gradually reduced discount. Councils also offer targeted reliefs for shops, cafés, gyms and similar venues, and rules exist covering a second property for a year or relief on both properties if certain low-value conditions are met. It’s worth phoning your local council — you might be leaving money on the table. VAT is another area to review. You only need to register if your taxable turnover exceeds £90,000, but once registered you can reclaim VAT on business purchases. If something is used partly for personal reasons — say your phone — you can only reclaim the business portion (so a 50/50 split means half the VAT). Think long-term tax planning too. Increasing pension contributions gives immediate tax relief (basic-rate taxpayers effectively get a 20% top-up), and for those earning six figures, boosting pension payments can reduce taxable income enough to preserve personal allowances. Capital allowances let you deduct the cost of certain equipment from profits before tax. The Annual Investment Allowance currently covers up to £1 million on qualifying assets, and some items qualify for a 100% first-year write-off. If you use cash-basis accounting, you can also carry losses forward to offset future profits — useful after a tough year. Don’t forget the everyday deductions. Claim running costs such as business mileage, home-office expenses and training that helps you run the business. These routine claims often add up faster than expected. If you employ staff, check whether you’re liable for the Apprenticeship Levy — many small employers with a pay bill below £3 million won’t pay after using the £15,000 allowance — and whether you can apply for Employment Allowance to shave up to £10,500 off employer National Insurance. Finally, charitable giving can have tax benefits. Donations via Gift Aid or workplace payroll schemes attract relief, and donations in kind — like property or shares — can also be tax-efficient depending on how they’re given. A quick audit of these nine areas — rates, VAT, pensions, capital allowances, losses, expenses, apprenticeships, employment allowance and charity relief — could trim your tax bill noticeably without changing how you run the business. Start with the low-effort wins and work up to the bigger planning moves. --- Managing your business finances? TaxAce provides smart online accountancy services for UK businesses with flexible monthly plans. Image and reporting: https://smallbusiness.co.uk | Read original article