FINANCIAL TIPS

Annual Investment Allowance You have until 31 December 2015 to take advantage of the unusually high Annual Investment Allowance. The allowance gives 100% tax relief on plant and machinery up to £500,000. From 1 January 2016 the allowance falls back to the old rate of £25,000. It would be sensible to make any major plant and machinery purchases, such as a new van, before 31 December 2015.

Write it Down! It is not always possible to obtain a receipt for all expenditure, for example small cash purchases, parking meters etc. In the absence of a receipt, a record of the expenditure made on the same day in a diary will give good supporting evidence to HM Revenue & Customs. If there is neither record nor a receipt there will be no tax relief for the expenditure.

Value Added Tax Once your turnover on a rolling 12 months goes over £81,000 you must register for VAT and there are penalties for not doing so. You can however choose to register voluntarily and, if your turnover is less than £150,000, join the flat rate scheme. Under the flat rate scheme the business charges VAT on its turnover but instead of paying over the output tax (less recoverable input tax) in the normal way, the business pays the appropriate flat rate percentage. There is often a gain for the business of the difference between the standard rate charged on sales and the amount paid to Customs & Excise.

Use Your Home Many small businesses are run from home. A claim against taxable profits can be made for part of the expenses of the home if they are wholly and exclusively for the business. So a proportion of the light and heat, council tax, mortgage interest etc., for the room used as an office or workshop can be claimed as a tax deductible expense.

Rebecca Callow is an Associate at McCabe Ford Williams Chartered Accountants

FINANCIAL TIPS FROM REBECCA CALLOW

McCabe Ford Williams 17 Hart Street Maidstone Kent ME16 8RA 01622 683 627 www.mfw.co.uk maidstone@mfw.co.uk

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