This is also known as an Enhanced Capital Allowance (ECA) & can be used for water and energy-efficient equipment. These allowances don’t count towards your Annual Investment Threshold. If you are starting up your small business, you can qualify for first-year allowances on newly purchased equipment. Writing down allowance can also be used if the item doesn’t qualify for AIA, such as gifts, cars or items you owned before using them for your small business. In case you have already claimed Annual Investment Allowance up to the threshold of £1 million, instead, you can claim a portion of the value as Writing down Allowances. This includes the cost of computers, scanners, printers, fax machines, computer software, chairs and office desks.īefore calculating the business’s tax bill, to prove that provided equipment is purchased in the business’s name, you’ll need to have the invoice and receipts.Ī small business can claim these deductions under its Annual Investment Allowance (AIA), which allows up to £1 million currently of plant and machinery deductions each year. Small business can deduct the cost of computing, manufacturing and office equipments. So, for a typical small business in the UK, the £6/week home office allowance represents the potential tax saving of £124.80 a year. Here, the proportion usually is based on your home office’s square footage, the number of rooms in the house, excluding bathrooms, toilets, kitchens, and hallways. If you don’t want to claim the above allowance, you can claim an appropriate proportion of household bills as a business expense, including council tax, heating and lighting costs. Small business owners who regularly work from home can claim a small tax deduction of £6 per week (£4 per week before 06 April 2020) without keeping receipts, itemised bills and other documentation. That’s why read on to know some common 25 small business tax deductions to save more tax, 1. Proper tax planning can ensure that you are taking advantage of all deductibles available to your small business.īy legally claiming the tax-deductible business expense, your business may owe less in taxes - sometimes even much less. Many businesses unnecessarily pay additional tax each year because legitimate tax deductions go unclaimed.Ĭlaiming legitimate deductions is an essential tax-saving strategy for small businesses. Usually, the business owner wants to save money – and small business tax deductions are the best way to do exactly that.
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