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How to streamline your tax return process

Simon Shaw, director at Duncan & Toplis Newark

Many businesses choose to trade as sole traders or partnerships. Although there are other ways that a business can operate, this is very often an appropriate choice for both new and sometimes longer established concerns who wish to keep their affairs simple.

The owners of these businesses will need to report their business profits using their annual self-assessment tax return.

Although self-assessment tax returns are filed on an annual basis, preparation throughout the year is key! Keeping accurate and timely records of all the business income and outgoings will enable the annual accounts and tax return to be prepared as quickly as possible. There are many accounting systems available that will help businesses of all sizes record their transactions. One of my favourites is Xero which is a cloud based system, allowing it to be used wherever there is a web browser. There are also add on apps which help the recording process including linking to the business bank to reduce the sometimes time-consuming work of inputting transactions.

One important thing to ensure is that all business costs are recorded so that they can be claimed as a cost against profit. Cloud based accounting systems allow you to capture these costs by simply taking a photo on your mobile, and therefore stop the annual search for those mis placed receipts.

One question I often get asked is what costs can I claim against my business? The general rule is that costs must be wholly and exclusively for business purposes to be claimed. Some costs might be for both business and private purposes and therefore should be split appropriately to claim the business element in the tax return. It is important to keep good records for these types of costs in order to support the split between business and private.

For example, the use of a vehicle may incur costs which have both a business and private element the costs incurred in running a vehicle should be recorded in the bookkeeping system alongside a detailed log of business and private journeys. This record can then be used to calculate the split between business and private use so that the costs can be apportioned appropriately.

An alternative for small businesses with turnover below the VAT registration threshold is to claim a mileage allowance for business miles travelled. The allowance starts at 45p per mile for the first 10,000 business miles in a tax year, reducing to 25p for every mile thereafter. However, it is important that a detailed record of business journeys is kept in order to support the claim.

Once all the income and costs have been recorded, the next step is to prepare the annual accounts for the business. Again, this is a much simpler and efficient process if accurate records have been kept throughout the year. Accounts can be drawn up to any date and although many businesses do this for twelve months from the date they started, it is sometimes simpler to prepare accounts to the end of the tax year.

Using an accountant who understands your business is important to ensure the correct tax is paid, as well as keeping the process an easy and stress-free one!

To find out how Duncan & Toplis can help you with your business tax return please call us on 0808 169 1196.


Simon Shaw

Simon Shaw acts for a wide range of family businesses across a variety of sectors ensuring their business and tax affairs are organised in such a way as to maximise the return on their efforts. Simon recognises the need to provide practical solutions for his clients in an ever-changing business environment, additionally Simon is a Funding Options adviser. Based in Newark, Simon is actively involved in many local business and charity organisations including being the Vice Chairman of the Newark Business Club and a trustee of two local charities. Simon is also a Governor and Chairman of the Audit & Finance Committee at Sir William Robertson Academy and a member of the Rotary Club of Newark.

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