Establishing which category your property falls into can help you find out the specifics of your tax obligations.

What type of property do you own?

Defining if your property is a furnished residential let is simple.

If your residential property is either partially or fully furnished at the time that it was let out, then it is a furnished residential let.

However, defining your property as a FHL is more complex. For your property to be an FHL, it must be:

• Furnished sufficiently for normal occupation
• In the UK or European Economic Area (EEA)
• Let to make a profit
• Available for letting as an FHL at least 210 days out of the year
• Let commercially for at least 105 days a year
• Long-term lets over 31 continuous days don’t exceed 155 days of the year.

Whichever property type yours falls into, you must understand your tax obligations and available reliefs.

Furnished residential lets

There are limited tax reliefs available for furnished residential lets. Since 6 April 2020, Income Tax relief has been limited to the basic rate of Income Tax. They are also limited to the lowest mortgage interest, furnished let income, or your adjusted total income.

You may want to consider offering your property unfurnished, as there is no longer a ‘wear and tear allowance’ for landlords to deduct from their taxable earnings.

There is the ‘replacement of domestic items relief’, which allows you to claim certain items as expenses, as well as disposing of the old item.

Furnished Holiday Lets

Currently, FHL owners can enjoy significant tax benefits. However, the Furnished Holiday Let allowance is set to be abolished in April 2025, meaning that there will be fewer tax benefits for landlords.

Under the current regulations, FHL owners can benefit from:

• Claiming up to £1 million of capital expenditure under the Annual Investment Allowance (AIA)
• Costs such as mortgage interest are fully deductible from rental income, lowering your taxable income
• Business Asset Disposal Relief can replace GCT if their operations are classed as a business
• Earnings from FHLs are considered earned, so are eligible for relief at the owner’s highest rate of Income Tax.

Unfortunately, FHLs will likely come under the same rules as residential holiday lets from next year. This means that there will be less tax benefits to owning a FHL instead of a residential rental property.

If you need advice with your property taxes, our team are here to help.

Get in touch today to discuss tax relief for your rental properties.

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The substantial policy change affects how taxpayers learn about repayments.

Starting from 8 April, HMRC will cease issuing letters to individuals or their agents to announce a repayment for Corporation Tax or Income Tax Self-Assessment (ITSA).

Repayments will proceed as usual and will appear on the HMRC online services accessible to both agents and taxpayers.

There is no extra action required to secure these repayments.

HMRC explains that the move to discontinue confirmation letters comes in response to the confusion caused by letters arriving post-repayment, leading to a surge in enquiries for clarification from taxpayers.

How will I be affected?

You, as a taxpayer, will now need to pay closer attention to your online account with HMRC.

It is crucial to become acquainted with the HMRC online services, paying particular detail to the sections where tax repayment information will appear.

If you manage your tax affairs through an agent, it is vital that your agent checks their account frequently and updates you on any tax repayment communications.

Furthermore, stay vigilant for any letters about tax repayments in the future, as they could be scams.

HMRC and its taxpayers are often the targets of fraudulent schemes, especially when there’s a notable change (such as the discontinuation of a standard HMRC letter).

It is important you are wary of potential fraudulent letters – these might feature:

• An incorrect department address
• An invalid phone number or email address
• Incorrect personal information

If you still receive letters from HMRC about repayments and suspect fraud, it is important to report them to the department.

Keeping informed about HMRC’s communication methods is crucial to help identify and report any fraudulent letters and information.

For assistance with tax repayments and navigating HMRC communications, contact a member of our team for support.

The post Are you owed a tax refund? Watch out for changes to your account appeared first on Grunberg & Co.

As well as providing up-to-date information, the app can help you manage your tax payments, find out benefits you may be entitled to, and get in contact with HMRC.

It is a great alternative to accessing HMRC services online.

Accessing the app

You can download the app from either the App Store or Google Play for free. Once you have downloaded the app to your device, you will need to sign in for the first time using your Government Gateway Credentials.

Once you have signed in for the first time, you can access the app using either:

• A six-digit pin
• Your fingerprint
• Facial recognition

When this has all been set up, you are free to access the app as and when you need.

Available information

On the app, you will be able to access information about your taxes both past and present. This will include:

• Your Unique Taxpayer Number (UTR) for Self Assessment
• Your National Insurance number
• Your employment income for the current and previous five tax years
• Your income and benefits
• Your Child Benefit
• Your State Pension

From here, you will be able to store your National Insurance number in your digital wallet, so you can more easily access it when you need to.

Making payments

The app can help you to stay on top of your tax payments.

From the app, you will be able to see how much Self-Assessment tax you owe. You can also make payments for this using open banking.

As well as making payments, you will be able to calculate your take-home pay and apply for any tax refunds.

HMRC communications

You can access letters and communications from HMRC in the app if you opt to communicate digitally. This allows you easy access to important information and makes you less likely to miss important messages.

Any forms that you have submitted can also have their progress tracked via the app so that you can be sure that everything is running smoothly.

Any updates to your personal or financial details can be updated through the app. This includes any changes to your name, address, and bank details.

New services

A recent update has expanded what the HMRC app allows you to do. As well as the above, you are now able to:

• Manage your Child Benefit
• View your National Insurance history
• Check your State Pension forecast

This allows you to have a better idea of your financial past, present, and future.

Moving towards Making Tax Digital (MTD)

As the future of HMRC moves towards digital-only services, getting onboard early is the best practice.

The app is a step towards this digitisation of the tax system, with more updates to come, including the requirement to be more accessible to individual taxpayers.

MTD will be compulsory for the self-employed and landlords earning over £50,000 from April 2026. For those with an income above £30,000 but below £50,000, this will be from April 2027.

After these dates, you will be required to:

• Maintain digital tax records
• Use MTD-compliant software
• Submit quarterly updates

If you are struggling to adapt to HMRC’s digital services, one of our experts can help.

Contact us today for help and advice with managing and accessing HMRC’s digital services.

The post Could the HMRC app help you manage your taxes? appeared first on Grunberg & Co.

It is important consider your pension contributions, salary sacrifices and Capital Gains Tax allowances for you to receive the right benefits for you.

There are range of tax-free allowances you should consider using before the end of the tax year on 5 April and this is detailed below.

Personal allowance and dividends

The first £12,570 of your income is covered by your personal allowance and is received tax-free unless your total income exceeds £100,000.

An additional £1,000 of dividend income is covered by dividend allowance (if not already covered by the personal allowance).

This means there is no tax to pay.

If you are a basic rate or higher rate taxpayer, you can also benefit from the personal savings allowance.

This means the first £1,000/£500 (respectively) of interest is free from tax.

Capital Gains Tax

It is important to consider and use the Capital Gains Tax (CGT) annual exempt amount.

This will mean you could receive up to £6,000 of capital gains completely tax-free.

You could potentially use this to further re-invest the gains.

You do need to know that, from April 2024, the amount will reduce to £3,000 per annum and, if you do not already do tax returns, you will need to if your gains exceed £3,000 in future years.

ISAs

Using an ISA would mean you automatically get zero interest on up to £20,000 worth of interest.

These are a great way of making investments as they allow you to make full use of the annual limits for contributions to your ISAs.

Any growth, income, and gains within these are again completely tax-free.

The annual maximum amount for an adult, that can be saved in ISAs, is £20,000 in a combination of ways through stocks, shares, innovative finance, or cash.

If you have children, they can have a junior ISA with a maximum of £9,000, up to the age of 18.

Pensions

There is sometimes confusion surrounding the rules of pensions but, when properly understood, they can be another way to reduce your tax liability.

You can use up your personal allowance for pension contributions – the amount you put in which largely depend on the amount of your income for the year, what the income is, and what unused allowances you have from the three prior tax years.

At a minimum, you can make pension contributions of up to £3,600 (gross) in the year and an annual allowance of up to £60,000.

Contributions to your personal pension will also reduce your adjusted net income thus there might be benefits if your income is between £100,000 and £125,140.

This applies where the personal allowance is reduced or for those with income between £50,000 and £60,000 who are subject to the High Income Child Benefit Charge (HICBC).

Always remember to take care with your pension contributions so as not to exceed the annual allowance.

It is crucial to maximise your tax allowances whilst they are still around.

If you would like to make the most of your tax-free allowances before 5 April, get in touch with a member of our team today.

The post How can I use my tax-free allowances before 5 April? appeared first on Grunberg & Co.

With the end of the 2023/24 tax year coming up on 5 April, now is your final chance to take advantage of annual reliefs and allowances.

Annual allowances

There is no limit on how much you can pay into your pension pot, however, there is a limit on how much you can pay tax-free.

All the pensions that you pay directly and any pensions that are run by your employer all count towards this threshold.

Combined, you can put up to £60,000 into a private pension each tax year without paying tax.

Salary sacrifice and pension contributions

If your income is just above the higher or additional rate Income Tax threshold, you may want to make use of a salary sacrifice scheme.

This is offered by some employers where your pension contributions are paid directly from your earnings.

By doing this, you reduce your taxable salary. As a result, you will pay less Income Tax and National Insurance, and even reduce your Income Tax threshold.

Threshold income vs adjusted income

Your income can affect your tax allowances and reliefs, as they are applied on a tapered scale using two measures.

These are your threshold income, which is your income excluding pension contributions, and your adjusted income, which is your income including pension contributions.

Your pension contribution allowance decreases if your threshold income is over £200,000 and your adjusted income is over £260,000.

You can calculate your pension allowance using HM Revenue & Customs (HMRC) guidance.

Accessing your pension

Your tax-free threshold may also be reduced if you access your pension pot. This includes taking cash or a short-term annuity from your pension on a flexible basis.

It is best to check with your pension provider whether the flexibility of your pension will affect your tax obligations.

With this type of pension, you are only able to put in £10,000 for the current tax year.

Lifetime Allowance

In April, the Government will be abolishing the Lifetime Allowance (LTA) on pensions. Under the previous legislation, you paid tax on pensions savings above £1,073,100.

The new legislation introduces two new systems for taxing pensions. The Individuals Lump Sum Allowance (LSA) will be set at £268,275 and the Individual Lump Sum and Death Benefit Allowance (LSDBA) is to be set at the same rate as the LTA.

This is another thing to consider when planning your pension.

Reaching the allowance

Once you have reached the £60,000 allowance, paying more into your pension pot can create a tax liability.

There are other options available to you to help improve the tax efficiency of your income. These include:

• Paying into an ISA
• Making a gift from your salary to a charity
• Asking your employer if they offer a salary sacrifice scheme – although this will only affect future tax years.

Paying into your pension is a great way to plan your future whilst reducing your tax obligations in the present.

It is best to make use of your £60,000 allowance before the end of the tax year if you haven’t already.

For help on your pension contributions and tax planning, speak to a member of our team today.

The post Are your pension contributions tax-efficient? appeared first on Grunberg & Co.

No, it’s not some reference to a particularly brazen crook who picked pockets during the day – it actually comes from one of the UK’s weirdest tax laws.

In fact, the UK has had various strange tax laws over the almost 1,000 years of its history.

We were recently discussing some of these in the office and found some of them to be almost unbelievable.

Here are 10 of our favourites.

1. Aromatic Powder Tax – an end to the wearing of wigs (1795-1869)

This tax on the aromatic powders used in wigs caused a serious decline in wig popularity in the UK.

It’s fair to say that the elaborate wig industry never really recovered.

2. Decimation Tax – Royalists beware (1655)

In 1655, Oliver Cromwell introduced the decimation tax, a 10 per cent levy on Royalists or suspected Royalists (those who supported Charles I during the recently concluded English Civil War) to fund the militias that Cromwell had established to maintain order.

This would be the equivalent of if Abraham Lincoln had decided to impose a 10 per cent tax on those who had backed the Confederacy.

As you might have guessed, it didn’t go down well and Cromwell’s decimation tax had a very brief existence.

3. Scutage Tax – the real price of cowardice (roughly 1100-1300s)

King Henry I introduced the scutagium or Scutage Tax allowing knights to avoid military duty in his campaigns by paying a fee.

It soon became known as the tax on cowardice.

4. Playing Cards and Dice Tax – gambling with forgeries (1710-1960)

This tax on playing cards and dice led to widespread forgeries to avoid paying it.

The manufacturer was responsible for paying the tax and the Ace of Spades in each pack carried a stamped mark indicating that the tax had been paid.

This was only repealed in 1960 and there exists a particularly entertaining exchange between two Members of Parliament, in 1908, in which Mr Asquith and Mr Bottomly, discuss the issue.

Mr Asquith claims that: “The duty derived from playing cards in 1906/07 amounted to £32,672.”

Mr Bottomley replies: “Does not the right hon. Gentleman think that the imposition of a tax on playing cards implies State regulation of gambling?”

Bluntly, Mr Asquith quips: “Not necessarily.”

5. Printed Wallpaper Tax – a blow to interior design (1712-1836)

The wallpaper tax was a property tax introduced in Great Britain in 1712, during the reign of Queen Anne.

Patterned, printed, or painted wallpaper rose to the equivalent of £3.86 per square yard by 1809.

You could bypass the tax by buying plain paper and having it hand stencilled.

The tax was abolished in 1836.

6. Brick Tax – find bigger bricks (1784-1850)

The tax on bricks probably started as a reasonable idea, but much like many others, policy makers quickly learned of the ingenuity of the public when it comes to tax mitigation.

The basic principle was the more bricks you use, the more tax you pay.

So, what did builders do? Use bigger bricks!

It was eventually repealed in 1850.

7. Fireplace Tax – energy efficiency taken too far? (1662-1689)

This tax on fireplaces was, again, not a bad idea.

In essence, the Government of the day was trying to tax the richer houses (those with more fireplaces) harder than the poorer homes.

However, taxpayers quickly realised they could hide their fireplaces with bricks to evade the tax and it was repealed in 1689.

8. Salt Tax – Gandhi’s protests and the Dandi march (1835-1947)

This particular tax gained international attention when Gandhi staged nonviolent protests against it.

It was a British colonial policy that heavily taxed the production and sale of salt.

This was particularly harsh on the inhabitants because salt was a staple necessity, and the high taxation made it prohibitively expensive for many Indians, impacting their daily lives and economic well-being.

The Dandi March, also known as the Salt March, saw Ghandi and his followers walk 240 miles to the Arabian Sea to protest the British salt monopoly and this oppressive tax.

It sparked widespread support for India’s independence movement.

9. Hat Tax – you can’t stop fashion (1784-1811)

This tax on men’s hats simply led to hat-makers avoiding the term “hats,” causing a subsequent tax on all headgear, which was repealed in 1811.

10. Window Tax – daylight robbery (1696-1851)

This is where we get the term “daylight robbery” from.

Similar to some of the above-mentioned taxes, the intention was to tax richer houses based on the number of windows.

As you have probably guessed, this led to windows quickly being bricked up – usually starting at the servant’s quarters – and creating the term we continue to use today.

Have our taxes really improved much?

Today, our tax system looks a lot better than in the past and certainly contains less weird and wacky legislation.

It has been a continual process of improvement over almost 1000 years.

Having said that, just because it’s efficient and we have wormed out the sillier taxes, doesn’t mean it’s simple.

Today, the British tax code contains over 10 million words and over 21,000 pages – the longest in the world.

(By comparison, the Hong Kong tax code, arguably the most efficient in existence, is around 350 pages long).

As such, the complexity and sheer weight of the UK tax code are overwhelming for most people to get their heads around.

That’s why, if you run a business, you need an experienced and qualified tax adviser on your team.

Please get in touch with one of our team if you are confused about any aspect of the UK’s tax system – we are ready to guide you through your liabilities.

The post Top 10 weirdest historical British taxes appeared first on Grunberg & Co.

It’s the gain you make that’s taxed, not the amount of money you receive.

As we approach 2024, individuals and businesses in the UK should understand the implications of CGT and explore ways to minimise its impact on their finances.

This article aims to provide you with practical strategies to reduce your CGT liability in 2024, alongside an overview of upcoming CGT rates for the year.

Understanding CGT rates for 2024

Before looking at reduction strategies, it’s important to understand the CGT rates for 2024.

CGT rates can vary depending on the type of asset and your income tax band. For the tax year 2024, the rates are as follows:

• 10 per cent (18 per cent for residential property) for your entire capital gain if your overall annual income is below £50,270.
• 20 per cent (28 per cent for residential property) for your entire capital gain if your overall annual income is above the £50,270 threshold.

Remember, these rates are subject to change based on Government announcements, so always check for the latest information.

Utilising tax-free allowances

One of the most straightforward ways to reduce your CGT is to make use of your annual tax-free allowance.

In 2024, every individual in the UK has a CGT allowance, meaning you can realise gains up to a certain amount without paying any CGT.

For 2024, the allowance will be £3,000 for individuals and £1,500 for most trustees.

If you have unused allowance in a given tax year, consider planning your asset disposals to maximise this benefit.

Timing your asset disposal

The timing of selling your assets can significantly impact your CGT.

If you expect to have a lower income in a future tax year, it may be beneficial to delay selling assets until then, potentially placing you in a lower tax bracket and reducing the CGT rate applied to your gains.

An experienced accountant will be able to recognise where the opportunities for this strategy lie.

Transferring assets to a spouse or civil partner

Transferring assets to your spouse or civil partner can be a useful way to reduce CGT.

Transfers between spouses or civil partners are usually CGT-free, and if your partner pays tax at a lower rate than you, any future gains may be taxed at a lower rate when they dispose of the asset.

Investing in an ISA or pension

Investing in an Individual Savings Account (ISA) or a pension can offer significant tax advantages.

While you can’t transfer existing shares into an ISA, selling shares and then repurchasing them within an ISA, known as ‘Bed and ISA’, can be a strategy to realise gains in a tax-efficient manner.

Similarly, contributing to a pension can reduce your taxable income and potentially bring you into a lower CGT rate band.

The yearly pension allowance for 2024 is set to be £60,000, but again, this could change depending on Government policies.

Offsetting losses against gains

If you’ve made a loss on some of your assets, you can offset these losses against any gains you’ve made, reducing your overall CGT liability.

It’s important to keep accurate records of any losses, as these can be carried forward to offset against future gains.

Claiming relief on business assets

Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief) is a significant consideration for business owners looking to reduce their CGT liabilities.

The relief can reduce the CGT rate on qualifying business assets at the point of sale.

You should ensure you meet the criteria and consider this when planning the disposal of business assets.

Investing in Enterprise Investment Schemes (EIS)

Investing in EIS-eligible companies can offer CGT relief on your investments.

EIS is designed to help smaller, higher-risk companies raise finance by offering tax relief to investors.

Gains on EIS shares are free from CGT if held for a minimum period, usually three years.

Seeking professional advice

CGT is complex and often changes depending on Government policy so we may see a new set of challenges emerge after the general election next year.

Either way, it’s always advisable to seek professional advice tailored to your individual circumstances.

A qualified accountant or tax advisor can help you navigate the complexities of CGT and develop strategies that are most beneficial for your specific situation.

Remember, every financial decision should be made considering your overall tax position and long-term financial goals.

Please speak to a qualified accountant to get help with your CGT liabilities.

The post How to reduce your Capital Gains Tax in 2024 appeared first on Grunberg & Co.

Capital Gains Tax (CGT) is one of the key taxes that both individuals and businesses of all sizes must deal with.

Knowing how CGT impacts you or your business can help in making informed investment decisions, planning for succession and preparing for later life.

Tax rates for capital gains

What dictates the rates?

The rates for CGT vary based on two main factors, your Income Tax bracket and the type of asset you are selling.

It is crucial to be aware of these factors in order to plan effectively.

Rates for different taxpayers

Basic rate taxpayers

If you fall within the basic tax rate bracket, the rate of Capital Gains Tax you will be liable for is influenced by the size of your gain, your taxable income and the nature of the asset, whether it is residential property or other types of assets.

Should the total amount lie within the basic Income Tax threshold, your capital gains will be taxed at 10 per cent or 18 per cent if the gain is from residential property.

For any amount that exceeds the basic tax rate, the tax will be 20 per cent or 28 per cent if it is residential property.

Higher and additional rate taxpayers

These taxpayers must pay 20 per cent on assets and 28 per cent on residential property.

Private Residence Relief

It is worth noting that the sale of your main home will usually not be subject to CGT, due to the Private Residence Relief.

This is a significant relief and it’s essential to know if you qualify.

The importance of knowing your tax bracket

Understanding which tax bracket you fall under is a crucial aspect of financial planning.

It affects not just the amount you owe in Income Tax, but also your CGT liability.

Reducing your Capital Gains Tax liability

Reducing your CGT isn’t just about savvy investing, it is also about making the most of allowances and reliefs available to you.

• Utilising your Annual Exemption Allowance – Each financial year, individuals have an annual exemption allowance that they can use to reduce their CGT liability. The current Annual Exemption Allowance threshold is £6,000 or £3,000 for trusts (as of October 2023).
• Transferring assets to a spouse or civil partner – If you have utilised your Annual Exemption Allowance, consider transferring assets to a spouse or civil partner to make use of their allowance as well.
• Offsetting capital losses against gains – If you have made a capital loss in the same year, you can offset this against your gains to reduce your CGT liability.
• Business Asset Disposal Relief – For businesses, particularly small and medium-sized enterprises (SMEs), there is an additional allowance called Business Asset Disposal Relief (formally known as Entrepreneurs’ Relief). This can significantly lower the amount of CGT due on the sale of business assets.

Understanding the nuances of Capital Gains Tax is crucial for individuals and businesses alike.

It is not just about knowing what you owe but also about understanding what allowances are available for you.

As always, consider consulting an accountant for tailored advice that suits your specific circumstances.

If you need advice on CGT, don’t hesitate to get in touch with our team today.

The post Navigating Capital Gains Tax – What do you need to know? appeared first on Grunberg & Co.

Maximising tax deductions is a smart way to keep more of your hard-earned money to reinvest in your business.  

In this article, we explore some valuable tips on how small businesses in the UK can make the most of available tax relief to reduce their tax bills legally and efficiently. 

Claim all allowable expenses 

HMRC allows you to deduct certain business expenses from your income, thereby reducing your taxable profit.  

Common allowable expenses include: 

• Office rent or utility bills 
• Cost of goods sold 
• Employee salaries and benefits 

• Travel and accommodation expenses related to business activities 
• Office supplies and equipment 

Be sure to thoroughly review the official HMRC guidelines to ensure you’re claiming all the expenses you’re entitled to or speak to an accountant who can perform this task for you. 

Capital allowances 

Small businesses can benefit from capital allowances, which allow you to claim tax relief on assets you purchase for your business, such as machinery, equipment, and vehicles. 

Understanding the Annual Investment Allowance (AIA) and Writing Down Allowance (WDA) can help you make the most of these deductions. 

As of 2023, the AIA, which offers 100 per cent relief on plant and machinery investments, is set at £1 million. 

The WDA is more complicated and sees expense items grouped into pools depending on which rate they qualify for.  

• The main rate pool (plant and machinery) has a rate of 18 per cent. 
• The special rate pool (items that make buildings more environmentally friendly or improve them in some way) has a rate of six per cent.  

There are numerous other complicated regulations surrounding these capital allowances which we have not covered here. 

As such, it is important to discuss these allowances with a qualified and experienced accountant before proceeding.  

Research and Development (R&D) relief 

The UK Government encourages scientific and technology-based innovation through R&D tax relief.  

If your small business is involved in Research and Development (R&D) activities, you might be eligible for significant tax deductions on the expenses you incur.  

Companies engaging in R&D for new products, processes, or services in virtually every field are eligible for a cash payment or a Corporation Tax reduction when they submit a formal, comprehensive, accurate and detailed R&D claim. 

For small and medium-sized businesses, SME R&D tax relief is available where they comply with the following: 

• Less than 500 staff 
• Have a turnover of €100 million or less 

You should keep records of your R&D projects and consult with a tax or finance professional to determine your eligibility and maximise these deductions. 

Applying for R&D tax credits can be simplified with the assistance of an experienced accountant and is otherwise a tedious and complicated process.  

Employer’s National Insurance allowance 

One of the significant expenses that small businesses often face is the payment of National Insurance Contributions (NICs) for their employees.  

However, the UK government provides relief in the form of the Employer’s National Insurance Allowance, which can be particularly beneficial for small businesses.  

The Employer’s National Insurance Allowance allows you to reduce your employer’s NICs by up to £5,000 each tax year.  

This relief is available to most businesses, provided your total employer’s NIC liability in the previous tax year was less than £100,000. 

Self-employment expenses 

If you’re a sole trader or in a partnership, ensure you’re claiming all eligible expenses, such as home office costs, vehicle expenses, and other costs directly related to your self-employment.  

Keep detailed records of these expenses to support your claims and speak to an accountant to maximise these benefits. 

Keep accurate records 

The foundation of effective tax planning for your small business is maintaining accurate financial records.  

This means keeping detailed records of all your income and expenses.  

Use accounting software or hire a professional accountant to ensure your records are complete, organised, and compliant with HM Revenue & Customs (HMRC) requirements. 

Seek professional guidance 

Maximising tax deductions for your business is a strategic way to reduce your tax liability legally.  

By keeping meticulous records, claiming all allowable expenses, and taking advantage of available tax reliefs and allowances, you can ensure that your business retains more of its earnings.  

To ensure you’re maximising all available deductions and taking advantage of tax-saving opportunities, consider hiring a professional accountant with expertise in small business taxation.  

They can provide valuable insights and advice tailored to your specific situation. 

Consulting with a tax professional can help you navigate the intricacies of the UK tax system and optimise your tax strategy for the best possible results. 

To learn more, please contact one of our team.  

The post How to maximise tax relief for your small business appeared first on Grunberg & Co.

But moving losses from one accounting period to another can be an effective solution to managing your Corporation Tax bill.

By offsetting future profits with losses, you can minimise your tax liability and keep your business financially healthy.

However, it’s essential to understand the rules and regulations around carrying forward losses to ensure that you comply with the Corporation Tax act.

What is a loss-making period?

A Corporation Tax loss occurs when your business spends more money than it earns in a particular accounting period.

It’s not uncommon for businesses, especially start-ups, to experience loss-making periods as they require significant investments to get off the ground while generating relatively small revenues.

But as your business grows, the balance between expenditure and income usually shifts. That said, you can carry forward losses from previous accounting periods to offset any future profits, reducing your Corporation Tax liability.

How can you carry a loss forward?

Carrying a loss forward is not as simple as shifting expenses around.

To qualify for this, a loss has to be a trading loss, rather than the failure of an investment.

Therefore, only net losses are taken into account, which is the result of offsetting your business expenses against your income from sales and recurring revenue after a review of your cash flow.

For this to be counted, it must be taxable income from which allowable tax deductions have already been made.

While it’s possible to carry back losses, you won’t be able to carry the same loss forward into a new accounting period if you choose to do this.

When it comes to reporting losses, unlike carrying back profits, where you need to make a separate claim when you file your CT600 Company Tax return, your trading losses are automatically carried forward to offset profits for the accounting period.

Do you need advice on carrying losses forward and how to manage your Corporation Tax liabilities? Contact our team today.

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