Friday, March 20, 2009

Tax tips for the self employed

Small businesses are being hit hard by the recession, with 85 now closing every day. Simple tax measures could make all the difference in 2009 – and all businesses should ensure they take advantage of the Government’s new schemes to help the self-employed through these tough times.

Here are five top tax tips to help you ride out the recession. You can also read our small business survival guide here.
  1. Don't wait for help

    Don’t wait for HM Revenue & Customs (HMRC) to come after you if you owe money. If you have trouble paying, talk to the Business Payment Support Service to arrange additional time to pay.

    The service was set-up on November 24,2008 to allow businesses to delay payments of tax, National Insurance, VAT or other payments owed to HMRC. Call 0845 302 1435.

  2. Reduce your income tax
    If you are self-employed and your profits are falling, you may be able to reduce your income tax payments, which are due on January 31 and July 31. You will need to call HMRC and request a SA303 form or download one here.

  3. De-register for VAT
    Do you really need to be registered for VAT? You must register only if the value of your taxable supplies in the past 12 months or less has exceeded £67,000. De-registration may enable you to reduce your prices or to keep more of your sales.

  4. Use the VAT cash accounting scheme
    If you sell more on credit than you buy on credit, look at the VAT Cash Accounting Scheme. Normally you pay VAT on your sales whether or not your customer has paid you – but using this scheme means you do not need to pay VAT until the customer has paid. If the customer never pays, you never have to pay the VAT.

    You can use cash accounting if your estimated turnover during the next tax year is not more than £1.35 million. If VAT cash accounting is not for you, VAT bad debt relief can be claimed if your customer has not paid you after six months.

  5. Claim your small business rate relief.

    Businesses have to pay their rates – like council tax – to their local authority, but if your premises have a rateable value of £15,000 (£21,500 in London) or less then you can claim a discount. Contact your local council for more information.

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