It’s the start of a new year, and whether you’re a student or entrepreneur, there’s one resolution you’ll want to stick to – taking care of your tax.

For many, the date ‘31st January’ is firmly circled in diaries and calendars – it’s the deadline for the filing of self-assessment tax returns. But even if you aren’t self-employed, it makes sense to think about your taxes – and your plan for handling them – at the start of each new year. After all, if you’re a budding entrepreneur with a great idea, or if you’ve already set up your own business, you’ll want to ensure that you’re taking advantage of all the tax relief available.

Keep reading for four top tips on making tax work for your start-up:

Make VAT Viable

If you’re running a business, chances are that you’ll encounter Value Added Tax (VAT) sooner rather than later. But did you know that it’s an area in which business owners – particularly those with young start-up companies – commonly lose out?

Depending on your profession and turnover, the Flat Rate Scheme for VAT can be an area in which you can make big savings. Under the terms of the scheme, instead of adding up the output VAT you’ve charged and then reducing that based on the VAT you can reclaim, you calculate what is known as your ‘flat rate turnover’ (the sales for each quarter including any VAT you’ve charged customers). You then multiply this by the relevant flat rate percentage (these are set by HMRC, and differ depending on industry).

For small businesses, this method can represent an inherent cost-saving: time. Rather than sifting through reams of paperwork – not ideal if you’re a young entrepreneur trying to fine-tune your offering – you perform a simple calculation. Moreover, the amount of VAT you owe can work out to be significantly less than the amount you’d pay via the traditional route. HMRC also offer a 1% discount during the first twelve months of the scheme.

Work from Home

Considering whether to fork out for offices for your new team? Working together – and having a proper ‘base’ – has its benefits, but if you’re strapped for cash, it could pay to work at home. Not only will you significantly reduce overheads, but also HMRC offer a range of tax savings for people working from home – and not many people take full advantage of these.

Whilst many people working from home claim back money under the ‘use of home as office’ flat rate (starting from £10 a month), there are greater benefits to be reaped. Indeed, you can claim for a proportion of many common costs, such as:

  • Council tax.
  • Mortgage interest.
  • Gas, electricity and water.
  • Broadband and phone.
  • Household repairs/maintenance.
Consider R&D Relief

It’s been widely reported that not enough companies are aware of research and development (R&D) tax credits. This government initiative represents a potentially game-changing tax saving for companies that invest in innovation and development.

You’d be surprised how many companies qualify for these credits – it’s certainly not limited to big business. Better still, your start-up may be eligible for a cash payment as well as a Corporation Tax reduction under the terms of the scheme.

To claim, businesses need to attempt to ‘resolve scientific or technological uncertainties’. Qualifying activities include:

  • The creation of new products or services (an entrepreneur’s bread and butter!).
  • Changes to existing products or services.

Best of all, the scheme actively rewards risk-taking – your project does not need to be successful in order to qualify for the tax credits, which equate to up to 33p for every £1 spent. If you’re eligible to apply, you can claim for the following (and more):

  • Materials and overheads (such as power) – anything that is ‘used up or transformed’ by the process of R&D.
  • Staff costs, such as salaries and NIC contributions.
  • The hire of freelancers or contractors.
Seek Professional Advice – and Spend More Time Working

When trying to cut costs, the first thing most entrepreneurs or small business-owners do is take on more work themselves – including accounting and bookkeeping. The less money you pay to others, the more you can spend on the project, right? Wrong. As mentioned before, time really is money, and the more time you spend balancing the books, the less time you have to spend on your business. Moreover, even if you’re a meticulous record-keeper, you can’t possibly be aware of all the allowances, tax reliefs and savings that might be available to you. Hiring an experienced bookkeeper or accountant could pay dividends in the long run.

Crowdfund Campus isn’t only a valuable information hub for student entrepreneurs and budding business-owners – it’s also home to Sandpit, the simulated crowdfunding tool that allows you to trial your ideas safely through a virtual marketplace. Mapped to the QAA guidance on Enterprise and Entrepreneurship and approved by universities worldwide, Sandpit has been used successfully by many entrepreneurs and educators since inception. If you’d like to learn more, don’t hesitate to contact us today to book a free demonstration.