Many self employed people are unaware of the savings they could be making on their tax bill. It’s all legal, of course. What we’re talking about here are methods such as assessing areas where you may be paying too much tax when you shouldn’t be. You may not have worked this out previously because you don’t fully understand the way in which the system works. So, here are a few pointers that could help you save money on your tax bill:
Claim tax allowable expenses
You mustn’t forget that you can claim genuine expenses on your self-assessment form. Keep a log of your expenses throughout the year in order to claim them against your tax bill. These expenses might include the cost of rent and bills for dedicated business premises. If you work from home you can claim a proportion of such costs. Here you can find a detailed explanation of expenses you can and can’t claim for.
Give yourself a cash-flow boost
You can choose a date for the end of your accounting year. If you set this date earlier in the tax year, you will have more time to pay your tax bill while your profits increase. With more time to pay your taxes, it’s unlikely that you will miss the payment deadline and have to pay fines for late assessment or payment. Don’t forget that if you are unable to pay your tax bill on time, you should contact HMRC as quickly as possible. There is a chance that you can have the deadline extended or will be able to pay in installments.
Set up a pension plan
It’s important to think about your future, of course, but this is another way to help you save on taxes. If you set up a pension plan you will need to pay tax on payments you make into your pension as part of income tax. Yet the company in charge of your pension will claim the tax you paid back and add it to your pension. Even though you are not receiving that money right now, you are keeping it as yours for your nest egg.
At Highwoods & Associates, we can help you with self-assessment and reduce your tax liabilities. Contact us today for more information or a free consultation.