You may be currently calculating your tax return for this year, but while taxes and accounting are fresh on your mind, it is the perfect time to start thinking about your tax preparation for next year. Knowing your allowable deductions can help you plan for large purchases for years with higher income levels. First, you will need to know what is allowed or what is considered an allowed deduction. We have the information you are looking for.
Tax deductible expenses for your business
Before we discuss what expenses you can deduct from your taxes, let’s take a moment to discuss what qualifies as a tax deductible expense, according to HM Revenue and Customs, and what the term tax deductible means.
A tax deduction reduces the amount of income you can pay taxes on. It does not add to your refund, but rather reduces the taxpayer’s total taxable income by a certain percentage. Many people confuse this term with a tax credit, which reduces the amount of taxes a person owes.
According to HM Revenue and Customs, expenses that may qualify as tax deductions must be expenses directly related to your business. They should be used for your or your employees’ work and nothing else.
So what expenses can be used as tax deductions? These are just a few to consider.
- Office uniforms Do you want your employees to bring a more professional appearance to your business? A new office uniform can help with that, and according to HM Revenue and Customs, you can wear any type of corporate clothing or office uniforms as a deduction on your taxes.
- Travel expenses- Business trips can be very expensive. You may have to pay airline fees, hotel expenses, rental vehicles, and food. Those are obvious and usually not lost. But what about the times when you take a customer to the airport or send a basket of fruit to an employee’s hospital room when they are injured on the job? Can they be used as deductions? As long as all expenses are truly related to the business needs of your company, they can be deducted from your taxes.
- Capital permits-Capital expenditures or purchases made for the benefit of your business may be tax deductions. Such items could be new filing cabinets, new desks, new computers, or a new copier.
- Commercial mileageDo you need to take your company car to a business meeting? You can deduct the fuel or mileage you use for this purpose, as long as the trip is for business reasons.
- Professional fees-If your business is part of an organization that requires membership or registration fees, you may be able to deduct this cost from your taxes. However, only certain organizations approved by the Tax and Customs Administration (HMRC) can be used. You can find a list of approved organizations on the HMRC government website.
If the amount of tax you are paying this year puts you off, you may want to start planning ahead for next year. Take advantage of tax deductions by purchasing a new selection of office uniforms, joining HMRC-approved organizations, and purchasing new capital expenditures for your office. At this time of next year, your taxable income will be much lower, thanks to your deductions.