As we approach the new fiscal year, small business owners in Mansfield and beyond are looking for strategies to minimise their tax liabilities. Understanding the tax system and making the most of available deductions and credits can significantly reduce your tax bill. Here are some top tax-saving tips for 2024 that can help you keep more of your hard-earned money while remaining compliant with HMRC guidelines.
1. Make Full Use of Capital Allowances
Capital allowances allow you to write off the cost of capital assets, such as equipment, vehicles, or machinery, against your taxable income. In 2024, make sure to claim for all qualifying expenditures. The Annual Investment Allowance (AIA) provides an immediate deduction for the costs of most plant and machinery (excluding cars), and it’s worth checking if the limit has changed from the £1 million cap set for previous years.
2. Claim Research and Development (R&D) Tax Credits
For businesses engaged in innovative projects or developing new products, processes, or services, R&D tax credits are a valuable way to reduce tax. These credits allow companies to deduct an extra percentage of their qualifying costs from their yearly profit, in addition to the normal 100% deduction. Make sure your projects qualify and consider consulting a specialist to maximise this benefit.
3. Utilise Employment Allowances
Small businesses can benefit from the Employment Allowance which reduces employer National Insurance contributions (NICs). For 2024, check if you’re eligible to claim the allowance, which could reduce your costs if you have employees. This allowance is particularly beneficial for small enterprises looking to increase their workforce.
4. Take Advantage of Pension Contributions
Pension contributions are not only a wise investment in your future but also an effective tax relief strategy. Contributions to your pension scheme can be deducted from your taxable income. In 2024, consider increasing your pension contributions to maximise this benefit, which will also prepare you better for retirement.
5. Opt for More Efficient Business Structures
The structure of your business can significantly impact your tax liabilities. Operating as a sole trader, partnership, or limited company each has different tax implications. For many small businesses, incorporating can lead to significant tax savings under the right circumstances. Review your business structure in 2024 to see if a change could benefit you tax-wise.
6. Prepare for Making Tax Digital (MTD)
From April 2024, Making Tax Digital for Income Tax will become mandatory for businesses and landlords with income over £10,000. This means maintaining digital records and using software to submit income tax updates to HMRC. Get ahead by adopting compliant software now, which can improve record-keeping and potentially highlight additional areas for tax savings.
7. Check for Industry-Specific Deductions
Depending on your industry, there may be additional tax reliefs available. For example, businesses in the creative industries can benefit from various schemes designed to support sectors such as film, animation, video games, and theatre. Ensure you’re not missing out on any sector-specific opportunities.
8. Consult with Tax Professionals
Tax laws can be complex and ever-changing. Consulting with our team of accountants at Brealey & Newbury can provide you with personalised advice tailored to your business circumstances. This ensures you're taking advantage of all available tax-saving opportunities while maintaining compliance with the law.
Tax planning is an essential element of managing a small business and can make a significant difference in your financial health. By taking proactive steps and utilising these tax-saving tips for 2024, you can reduce your tax liabilities and ensure your business thrives in the competitive Mansfield market. Remember, effective tax planning starts with understanding your options and seeking expert advice.