advice on what type of things and allowances can be claimed for

[lankytwang]

Hi everyone,

just wondered if anyone could throw into the mix a list of all the weird, wonderful and obscure legal things that can be claimed for as expenses for a business.
My particular new business venture is to supply bulk pet food and supplies within the local area. I intend to run the business as a sole trader from my home address and use a logoed transit van, I also intend to rent a small unit for storage,. Initially I intend to drum up business from a leaflet drop (with attached 5% off voucher) of 10,000 leaflets with a commercial web site to follow shortly afterwards.
Any useful tips/ideas/advice/tax perks etc would be most welcome at this stage before I take the plunge

regards
Lankytwang

[tax-sorted]

Hi and welcome to the forum
If you go to my website www dot tax-sorted dot biz you can download loads of free guides explaining what you can claim and how to help make more profit.
Also sign up for the monthly tax tips ezine to find new ways of paying less tax each month.

[simonr]

Well, if you have a room in your house dedicated to the business you can claim back an approprate percentage of your household running costs: check the details of that though, as if you sell your house you could get heavily stung for tax unless there's been a suitable break since you last used it for business.

S

[tax-sorted]

errr - not quite correct any more as the tax laws changed relating to this. As long as you don't use a room exclusively for business then there will be no capital gains tax charge.

[ advert deleted by moderator ]

[topaffiliategirl]

I think you can have a tax refundable spending of up to £1,000.00 for christmas gifts for clients

[cheri]

Really? wow. I thought any expenses that you incur for the start-up/running are allowed. The best thing to do is get a good accountant who knows these things. My only knowledge is of contractor type expenses and these are much stricter!
Regards
CHeri

[tax-sorted]

Originally Posted by topaffiliategirl

I think you can have a tax refundable spending of up to £1,000.00 for christmas gifts for clients

errr - wrong again! Sorry!
Here are the basics on this: -

Christmas Gifts

* Gifts to customers are not an allowable business expense unless they are free samples of products or carry a conspicuous advertisement and cost not more than £50 per person per year. They must also not be food, drink, tobacco or gift vouchers.
* The VAT position is that you can reclaim the VAT as long as the cost is no more than £50+vat per gift to each client. Interestingly, you can still reclaim the vat if it is drink or tobacco.
* Trivial benefits can be provided to employees under the banner of staff welfare such as a turkey, box of chocolates or bottle of wine without them being taxable on the employee. There is no fixed limit but they should be reasonable. They would be tax allowable and vat reclaimable for the employer.
* Employees can receive gifts from third parties without them being taxable on them up to £250 (including VAT).

Christmas Parties

* You can spend up to £150 per employee on parties during the year, so if you've not had any other parties that leaves £150 for the Christmas party.
* The party must be open to all staff or all of a particular division or section. If the only employees are husband and wife, the party can be solely for you!
* The VAT can be claimed back in full on the Christmas party.
* It's ok for the spouses or guests of employees to attend the party but VAT cannot be reclaimed on this expense. It will be necessary to split the bill between the different guests for this purpose.
* The only applies to employees, not sole traders and partners.
* If you go over the £150 figure, the whole amount is taxable on the employee, not just the excess. If just over the limit consider getting the staff to contribute to keep the cost under £150. Not very Christmas like but better than a tax bill for them.
* The cost of the Christmas party is tax deductible for the employer, even if over £150 per head, unless it is excessive.
* If the party is for customers and staff the cost will not be allowable if the entertainment of staff is just incidental.

If you're still confused, please contact us for advice.

[tax-sorted]

Originally Posted by lankytwang

Hi everyone,

just wondered if anyone could throw into the mix a list of all the weird, wonderful and obscure legal things that can be claimed for as expenses for a business.
My particular new business venture is to supply bulk pet food and supplies within the local area. I intend to run the business as a sole trader from my home address and use a logoed transit van, I also intend to rent a small unit for storage,. Initially I intend to drum up business from a leaflet drop (with attached 5% off voucher) of 10,000 leaflets with a commercial web site to follow shortly afterwards.
Any useful tips/ideas/advice/tax perks etc would be most welcome at this stage before I take the plunge

regards
Lankytwang

Here are a few more.........................
Ten Top Tax Tips for Business Start-Ups

Here's our ten top tax tips for business start-ups...

1. Look at how much a limited company will save you in tax against the extra costs - they start paying tax at just 19%.
2. Consider paying a wage to your spouse if they help in the business to use up their tax free allowance. Alternatively a partnership with your spouse may be sensible.
3. Think about applying for VAT registration to recover vat on expenses, especially if you mainly supply other vat registered businesses. Do so in plenty of time as delays in getting your VAT number can make it difficult to start trading.
4. Get your books set-up correctly from day one and keep all your receipts. It makes it a lot easier and keeps down your accountancy fees.
5. Set-up your business funding correctly to ensure you get tax relief on any interest paid.
6. Claim use of home as office if you work from home but to ensure you don't get caught for capital gains tax if you sell your house, don't use any part exclusively for business use - some golf clubs stored in the corner should do the trick.
7. Be careful of taking on any workers on a self-employed basis. You must correctly determine if someone is self-employed or an employee and getting it wrong can make you responsible for their tax.
8. One way to claim relief for motor expenses is claiming 40p per mile, so make sure you keep records of business mileage.
9. Value any of your assets you already have that you introduce into the business such as tools and equipment to claim tax relief on.
10. Don't take tax advice from someone down the pub - take advice from an expert.

For further advice on these and lots more start-up tax planning tips, please talk to us.

[simonr]

Originally Posted by tax-sorted

errr - wrong again! Sorry!
* Gifts to customers are not an allowable business expense

...and what about gifts to staff?

[tax-sorted]

Originally Posted by simonr

...and what about gifts to staff?

Unfortunately that's covered by HMRC legislation and gifts = income = tax
You can try this option though : -

Pay Staff Tax Free - Staff Suggestion Scheme

This scheme is specifically allowed and provided for in the legislation. It is very simple to operate and works as follows…

* Employees can be rewarded for making suggestions that relate to your business activities, and where the conditions apply, the payments can be made without tax or NI being payable. You get tax relief on the payment through your accounts, just as you do with paying normal salaries.
* If a suggestion is implemented and a real financial is expected to accrue, the employee can be paid the lower of; half the annual benefit expected in the short or medium term and £5000.
* Payments of up to £25 can be made for employees' suggestions as an encouragement, whether or not the suggestion is implemented. Employees can make as many suggestions as they want.
* The suggestion must be outside the scope of the employees' normal duties, so a production employee or director could suggest a sales idea for example.
* The suggestion must not be made in a meeting held for the purpose of proposing suggestions.
* The scheme must be formally set up but no formal approval is needed from HM Revenue & Customs.
* It must be open to all employees and not be part of their contractual pay or benefits entitlements.