Now that 2020 is almost over, it is time to update your income tax filing knowledge. If you are a car dealer, you might have to pay less tax, simply by getting the right information ahead of the end of the current fiscal year. Although there are many more considerations while filing tax, taking heed of the ones mentioned here can help you make the most of your tax-free allowances.
Here are the top 8 tax-saving tips all car dealers should be doing!
Check Your Tax Code
What is a tax code? A tax code shows the exact amount of tax that will be collected from your salary by the HMRC. This code can be located on your payslip. You must check your code every year or if you change jobs. It will help you ensure that the tax code is correct as per your situation. In case you find yourself on the wrong code, you might have to pay more tax in the next few months.
Benefit from Marriage Allowance
Another tax perk that you can enjoy is marriage allowance where couples benefit if one partner has a total income which is less than the personal allowance. If you are in a civil partnership or are married, you can transfer your unused personal allowance to the higher earner from the partner who earns less. You can potentially save up to £250 from marriage allowance.
Reclaim Overpaid Taxes
In case your income falls unexpectedly during a specific year or are a non-taxpayer, you might have been taxed more by the HMRC than you should have been. This is because HMRC assumes that your personal allowance is used equally every month. In this scenario, you can reclaim your overpaid taxes by calling HMRC or filling out the R40 form from HMRC.
Capital Gains Tax Allowance
CGT allowance is another tax-saving perk you can enjoy. Capital Gains is essentially the profit made from selling particular investments, including art, shares, second homes and antiques. Up to £12,300 Capital Gains are tax-free. Furthermore, civil partners and married couples with joint assets can claim a £24,600 double allowance. Remember that if you don’t use this allowance within a specific transaction year, you will lose it forever. It is not possible to add tax-free allowances for different years together.
Save All Your Receipts
As a responsible business owner, you must save all your expense receipts for income tax purposes. This includes all your phone and stationary bills, staff costs, accountancy fees, website and advertising costs, insurance, etc. Keep a record of all these expenses because, for all basic rate taxpayers, every £1 of expense directly deducts 20p/40p/45p off your income tax bill.
Transfer Your Assets To Your Spouse
You can also be exempted from paying Capital Gains Tax by transferring assets to your civil partner or spouse. In addition to that, if you are a lower-earning spouse, you might pay more favourable tax rates. Therefore, it might stand you in good stead to transfer investments and savings to your wife, civil partner or husband if they pay a lower tax rate than you do.
Don’t Forget About The Late Penalties
You must not delay filing the tax return even if you are worried about the potential tax bill. This is because the late submission penalty is usually steep, and you will have to pay a fine of £100 immediately.
Seek Help From An Expert Accountant
Self-employed individuals are responsible for paying their own National Insurance Contributions (NICs) and tax as opposed to working for an employer who deducts NICs and tax weekly or monthly to pay the money to HMRC. If you are self-employed, you will be required to pay Class 2 NICs, Class 4 NICs and income tax. Seeking help from a professional accountant can be a good idea at this point as they could not just streamline the entire taxation process for you, but also help you save your hard-earned money. In addition to that, accountants use cash flow projections for the exact estimation of the tax one has to pay. This will help you plan in advance, so that you do not end up putting a dent in your bank account at the end of each fiscal year.
Why Choose DNS Accounting Group To Help You With Tax Filing?
When it comes to saving tax, irrespective of your profession, it is of paramount importance to have an expert in your corner who has all the know-how of the industry. It is also vital that the accountant you choose is updated with the latest tax laws and can provide competent services to you each year. If your current accountant is not taking care of the pointers mentioned above, then it is likely that he/she is not servicing you well.
We, at DNS Accounting Group, offer a free initial 15-minute consultation to all our clients so that they can verify our competence firsthand and decide if they want our help in saving tax. We are a national multi-award-winning practice in the UK, handling all kinds of Taxation and Accounting burdens with ease.
We are an accountancy firm offering specialist Accounting & Business Advisory services to businesses operating within the car dealing/motor trade. Since you are a car dealer, we can help you with:
- Margin Scheme for Second Hand Car Sales
- Tax Planning and Compliance
- Business Loans
- Board Resolutions
- Shareholder Agreements
- Capital Allowances (CA)
- Transactional Tax Advice and Exit Planning
- Shareholder Wealth and Inheritance Tax Planning
- Employment Taxes and Company Cars
- VAT Planning and Compliance
- Strategic and Corporate Finance Support
- Business Support
- Cash Flow Management
- Payroll, Bookkeeping & Year End Accounts
- Dealing with HMRC Enquiries
We offer tailored solutions to help clients improve their performance and profitability and sharpen their competitiveness. If you are ready to get on top of your finances and avoid unnecessary setbacks in achieving your business goals, get in touch with us today at 020 3500 2646 or write to us at firstname.lastname@example.org for more details.