People who work for themselves can benefit from a range of tax perks. if you're self-employed, here are a few of the tips which could save you tax on your hard-earned money.
Tax-deductible expenses
Many expenses incurred while running your self-employed business can be deducted from your profits, reducing your overall tax. This could include things like fuel, phone costs, or running costs for your home office.
Find out what types of expenses you can claim.
Self-employed car costs
You can generally claim the running costs of a car you use for business (though not the cost of buying one). If you use the same car in your private life, you can claim a proportion of the total costs.
To do this, you'll need to either add up all of your motor expenses for the year and work out the percentage of business miles you did, or you can claim a fixed rate mileage allowance for business travel.
Cash-flow boost for self-employed
As a business owner, you can choose when your accounting year ends - and it's worth choosing carefully.
If you pick a Year-End & Statutory Accounts Outsourcing Services date earlier in the tax year, you'll have more time to pay tax on your profits. This means that as your profits increase, your tax bill will rise more slowly. The more time you have, the less likely you'll struggle to pay your tax bill on time.
Annual losses
If you make a loss in one tax year, you can carry it forward and offset it against profits from a more successful year. This decreases your taxable income.
You can find out more by consulting with our tax expert team.
Payments on account
Generally, self-employed people will be required to pay tax in two advance payments - in January and then. The amount you'll pay will be based on the previous year's tax bill.
So, if you expect to earn less in 2022-23 than in the year before, you can apply to reduce your payments on account. You'll need to submit form SA303, either online or via mail to HMRC.
For any tax-related queries, please connect with our tax team at info@xlkpo.com
