PROCUREMENT STRATEGY AND TRANSFORMATION
FINANCE
Expenses that aren ’ t deductible
The following expenses are regularly claimed by business owners but aren ’ t actually tax deductible .
1 . Clothing Unless you need protective clothing , or have to wear a uniform , most clothing is not tax deductible . Tested in court ( by a Labour peer no less ). 2 . Depreciation This is not something that is claimed , but some clients think increasing depreciation will help to reduce their tax bill . In actual fact , it is just an accounting adjustment and is tax neutral . 3 . Spectacles Although the cost of eye tests are claimable for workers using PCs – under Health & Safety legislation , the cost of the glasses is generally not claimable because they are not used ‘ wholly , exclusively and necessarily ’ for their work . 4 . Entertaining Although entertaining potential , or existing , customers can be put through a business ’ s accounts – and reimbursed to a director / employee , there is no deduction for Corporation Tax or Income Tax purposes . So , if a meal out is part entertaining and part subsistence for a director / employee , it is worth calculating the split between the two .
5 . Dividends We sometimes get asked , ‘ if I pay more dividends how much tax will that save me ? Unlike wages and salaries , dividends are not tax deductible against a company ’ s profits . 6 . Removal costs Although removal expenses ( up to £ 8,000 ) paid for by an employer can be tax deductible , this is only where the employee / director is starting a new job in a new area , or if the place where the duties are performed changes . 7 . Grocery bills A director / employee can claim for meals bought whilst at a temporary workplace , but cannot claim for doing the week ’ s shopping and taking food to work each day . 8 . Hire care and mileage If one uses a hire car in the business , one cannot also then claim the HMRC Approved mileage rates ( of 45p and 25p ) – because these rates are supposed to cover the wear and tear on personally owned vehicles .
Peter Bromiley ACA Partner at AMS Accountancy
Ask AMS Advice for small businesses AMS Accountancy Ltd . 01793 818400
See your accountant ANNUALLY to plan going forward and find tax efficient ways to pay money out from your business .
New tax rates and laws . Tax rates and allowances change annually - for example , when the new dividend tax was implemented in April 2016 , it became worthwhile for money business owner to transfer some shares to their spouse ; and there have been several recent law changes affecting rental income . So , it is important to be up-to-date with tax law when planning levels of income and business structure .
Retirement plans . If it ’ s roughly known when a business will cease / be sold , it may benefit the owners to reduce regular payments as income and plan to take monies out as Capital ( and pay Capital Gains Tax ) at the closure / sale of the business .
VAT . If the type of customer changes , say , from retail customers to other businesses , ( or vice versa ), then consider voluntary VAT registration / deregistration . Peter Bromiley ACA
See 60 + videos on YouTube . ‘ Ask AMS Accountancy ’ @ AMSAccountancy www . ams-accountancy . co . uk
Need help with your procurement ? Talk to PAMS
PAMS is a specialist procurement service , targeted primarily at SMEs , but available to all sizes and sectors of business . It provides quick and easy access to a source of procurement advice , support and guidance . It is not a ‘ system ’ or database – the service is provided by real people – procurement professionals and specialists with a wealth of knowledge and experience .
It has been developed jointly by Doug Fellows and Geoff McCatty who have worked closely together for over 20 years and undertaken many mixed and varied strategic procurement commissions for large corporate organisations . They now have a desire to pass on their experiences and help others who wouldn ’ t otherwise get exposure to their level of support . “ We want to provide a way for smaller and medium-sized businesses to access our knowledge and skills base without them having to spend large sums of money on expensive consultants or unsuitable proprietary procurement systems .”
It is not that SMEs universally do not recognise the value of good procurement , it is just that it can be difficult for them to resource and organise to achieve it consistently well . Many do not yet have either the critical mass or the business maturity to set up or operate a dedicated procurement function . With PAMS , we aim to help SMEs bridge the procurement capability gap and to do so in a flexible , cost effective manner .
“ The essence of PAMS is that it deals specifically with you and your people , your business and particular circumstances , your specific concerns and challenges – it is not ‘ off the shelf ’ or ‘ one size fits all ’.”
The benefits derived from PAMS may come by way of purchase cost savings , process efficiencies , training and knowledge transfer and improved competitiveness – all of which can contribute to improving your bottom line .
Doug Fellows
PROCUREMENT STRATEGY AND TRANSFORMATION
Contact Doug Fellows on 01793 781514 or email doug @ pams . support
Discover more at www . pams . support
14 THE BUSINESS EXCHANGE 2017