Chris Barnard
Chris Barnard

This guest article was written by Chris Barnard, a qualified accountant.

He specialises in helping self-employed individuals, small to medium business owners, and company directors with proactive tax planning. By thinking ahead and making smart financial decisions, you can reduce your tax liabilities and improve your overall financial health.

Connect with Chris on LinkedIn here.

Save Money with Expert Tax Planning

As the new Labour government hints at tax increases, it’s more important than ever to manage your money wisely when it comes to taxes. If you’re a self-employed person, SME business owner, or company director, proactive tax planning can save you money while staying compliant with the latest legislation.

Many think tax is just about sending receipts to your accountant and waiting for a bill, but there’s a much smarter way to approach taxes—especially if you’re running a small or medium-sized business. Tax planning is all about looking ahead, setting clear goals, and optimising your financial structure to ensure maximum tax efficiency.

Tax Savings for the Self-Employed and Sole Traders

If you’re self-employed or a sole trader, there are numerous ways to maximise your tax relief. Many people either claim too little or too much, which can lead to unnecessary costs or future audits. Here’s how to avoid both:

  • Trading Allowance: If your expenses are minimal, you might benefit from the £1,000 annual trading allowance without needing to itemise every expense. It’s quick, simple, and saves you time.
  • Home Office Expenses: Many of us now work from home, but did you know you can claim a portion of your household expenses? Calculating this can be complex, but working with a tax accountant ensures you’re claiming the correct amount while staying compliant.
  • Mileage Allowance: Whether you’re meeting clients, attending networking events, or driving to conferences, make sure you keep track of your business miles. You can claim 45p per mile for the first 10,000 miles and 25p per mile after that.
  • Telephone and Internet Costs: If you’re using your personal phone for both business and personal use, you can claim 50% of your total bill. For business-only phones, 100% of the cost is deductible.

By consulting with an expert, you’ll be able to strike the right balance between maximising your deductions and staying compliant with HMRC.

Tax Planning for Company Directors and SME Business Owners

Running a business involves more than just managing daily operations—effective tax planning can save you significant sums of money each year. Here are a few areas where you can benefit from proper tax advice:

  • Pension Contributions: One of the easiest ways to reduce your tax bill is through pension contributions. Payments into a pension reduce your taxable income, which can be particularly beneficial for high earners.
  • Salary/Dividend Mix: Knowing the right combination of salary and dividends can help you minimise your tax liabilities. The wrong mix can lead to overpayment or under-utilising available tax relief. This is where expert guidance makes all the difference.
  • Enterprise Investment Scheme (EIS) & Seed Enterprise Investment Scheme (SEIS): These schemes allow you to benefit from immediate income tax relief and deferral of capital gains when investing in qualifying shares. However, these schemes are complex, and it’s important to get advice to ensure you’re taking full advantage.
  • Crypto Tax Planning: Cryptocurrency taxation can be a minefield, but it’s also an area where expert advice is crucial. At Collective Concepts Accounting, we specialise in crypto tax returns and can help you navigate this evolving space.
  • Electric Vehicles (EVs) and Company Cars: If you’re considering a company vehicle, you may find that electric cars offer better tax benefits than traditional fuel-based vehicles. Depending on your situation, it might be more advantageous to use a company-owned EV or a van for commercial purposes rather than a standard car.
  • Company Telephone Costs: Business-related phone expenses are 100% deductible for directors, so make sure you’re claiming correctly.

Working from Home as a Company Director

Just because you’re a director doesn’t mean you can’t claim working-from-home expenses. Directors can claim at least the flat rate of £6 per week, and depending on how often you’re working from home, this could increase.

Proactive Tax Planning for SMEs

The higher up you are on the earnings scale, the more crucial tax planning becomes. We encourage proactive tax planning to avoid last-minute surprises and maximise your savings. We offer tailored tax advice throughout the year to help you manage your finances efficiently, ensuring you keep more of what you earn.