Ask the expert
Stephen Smith is the YorkMix finance and tax expert. He runs TaxAssist York, and is here to help you with all your money concerns
Restrictions on trade during the lockdowns have accelerated the shift to online retailing.
Many York businesses have shown amazing adaptability, creating an e-commerce store to run alongside their bricks-and-mortar operation.
Happily, this has often resulted in an upturn in sales – but that brings its own challenge, in potentially opening you up to greater tax liabilities.
So what can you do to prepare? Here are a few key tips.
Working from home: You can claim tax relief for a proportion of household costs if you have to work at home on a regular basis. This includes council tax, water rates, utilities, telephone, broadband and mortgage interest or rent.
Capital allowances: The Annual Investment Allowance (AIA) is a tax relief scheme for purchases of business equipment. Make the most of it on office purchases, from new computers to furniture to a new van or other commercial vehicle.
If you’re not already a limited company, this is a good option to consider if your profits are more than £40,000. Advantages include:
Salary and dividends: It’s a more efficient way to pay – you can extract salary and dividends when needed, maximising favourable tax rates. You can utilise an additional £2,000 dividend allowance, plus the majority of your income is then taxed at the dividend basic rate of 7.5%. Also you don’t need to pay Classes 2 and 4 National Insurance contributions.
Superdeduction: This only applies to limited companies. You can claim 130% capital allowances on qualifying, brand new plant and machinery, until March 2023.
Three places to get business support
Many of the coronavirus support grants have now ended. But there is still support out there to help your business thive.
The Ad:Venture fund supports start-ups and young business in their first three years of trading within the Leeds City Region – which covers York, Selby and Harrogate.
Growth grants are available between £1,000 and £25,000 to support capital growth costs, with businesses required to contribute a minimum of 50% of eligible costs.
It also offers other support, including start-up loans, mentoring, and specialist advice. More here.
2. Internationalisation fund
This fund, from the Department for International Trade, offers match-funded grants of between £1,000 and £9,000 for businesses expanding their international markets. It might help with things like market research, legal advice, international social media and business visits overseas. More here.
3. Skills support for the workforce
More than £3.7 million is now available for SMEs in York, North Yorkshire and East Riding to access training. It offers fully funded training to help businesses fill skill gaps, raise productivity and boost business growth. More here.