5 Ways to Get Your Tax Right!

5 Ways to Get Your Tax Right!

It’s said that only two things in life are certain – death and taxation. Benjamin Dyer, CEO of Powered Now, looks at five key ways that you can manage tax to your best advantage.

Sorting out tax has to be the least favourite thing that I do. However, unless we want to risk prison then dealing with it is one of life’s unfortunate necessities.

Charge less VAT when you can

Unfortunately, the trade industry in general, including work by electrical contractors, has the most complex VAT rules of any sector. That’s because although the standard rate of VAT is 20%, there are several circumstances, including new builds, some conversions and refurbishments along with energy saving installations and disability related work, which attract zero or reduced rate VAT at 5%.

There isn’t room here to go into the details but obviously if you know the rules and the competition doesn’t your quotes will be cheaper, even though you’ll get the same profit margin.

Take advantage of everything

As a sole trader you can claim subcontractor, staff and material costs against your sales. But you can also claim business related marketing, stationery, phone bills, travel costs, clothing (such as uniforms), insurance and bank charges, heating, lighting and business rates. Where you work from home you can claim a reasonable proportion of the costs of the home including electricity, council tax, mortgage interest or rent and internet and telephone use.

The rules for incorporated companies vary a bit but having employees introduces other possibilities, for example we’re just introducing a “cycle to work” scheme for employees which has some tax benefits. Childcare vouchers provide an even bigger potential saving. Where you fund these two schemes using a salary sacrifice approach, it actually saves both employers and employees money.

Record stuff when it happens

Getting your tax right requires records of all of your business expenditure, all of your sales invoices and various other things like CIS, if it applies to you. The best way to do this is to make sure that you make a record as soon as it happens – that way you don’t handle anything more than once and everything is still fresh in your mind. A product like Powered Now is just one example of the solutions that can help you here. However, remember that the product must be mobile and will work even when there’s no signal.

File things on time

Filing VAT, tax or CIS returns late leads to a whole lot of extra grief, a fine and you still have to file them anyway. Like the lesson on recording things promptly, the quicker you do it, the easier it is to get it right.

Use an accountant – things change

You may be very good at working out your tax but the problem is that the rules seem to change every year. That’s why I believe using an accountant is a good idea. It’s better to spend your time doing what you do best – running a great electrical contracting business.

Powered Now’s mobile app aims to take the pain out of paperwork for professional electricians and other trades. For more information visit: www.powerednow.com



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