Did you know your construction company could be paying significantly less in taxes than it currently does? As an experienced accountant specialising in the construction industry, I want to share with you five proven methods that will help you save money and increase your business’s profitability.
1. Take Advantage of Tax Relief Available for the Construction Industry
The UK construction industry has access to several key tax reliefs that can significantly lower your tax liabilities:
- Research and Development (R&D) Tax Relief: If your company is working on developing new construction technologies, you could reclaim up to 33% of the expenditure on these activities.
- Capital Allowances for Plant and Machinery: Invest in new equipment, and you may be able to deduct up to 100% of its value from your taxes.
- Energy-Efficient Building Allowances: Implementing solutions that improve the energy efficiency of buildings can bring additional tax benefits.
2. Optimise Your Company Costs
Proper expense management can lead to significant savings:
- Regular Cost Analysis: Review all your company expenses at least once a quarter. You’ll be surprised how much you can save by cutting unnecessary services or products.
- Negotiate with Suppliers: Gather quotes from several suppliers and negotiate better terms. Remember, loyalty in business is important, but it shouldn’t cost you a fortune.
3. Avoid Common Tax Mistakes
Many construction companies make the same mistakes that cost them thousands of pounds annually:
- Inefficient Financial Management: Always keep a financial reserve for unforeseen situations and understand the rules related to business entertainment.
- Neglecting Marketing: Even the best product needs promotion. Invest in effective marketing strategies.
- Ignoring Customer Needs: A satisfied customer is the foundation of success. Listen to feedback and adjust your offer accordingly.
- Neglecting Tax Returns: Keep track of VAT return deadlines, Construction Industry Scheme (CIS) statements, and other obligations to avoid penalties and maintain creditworthiness.
4. Implement Immediate Cost-Saving Changes
Here are a few changes you can implement right away, at no cost:
- Accurately recording mileage for business purposes
- Collecting and comparing receipts with bank statements
- Including occasional staff meals as expenses
- Regularly reviewing income and expenditure
- Limiting personal withdrawals and registering for payroll
5. Consider Professional Tax Advice
Employing an accountant specialising in the construction industry can bring additional benefits:
- Knowledge of industry specifics and the latest changes in tax law
- Assistance in identifying additional savings opportunities
- Support in strategic and investment planning
Summary
A strategic approach to taxes can significantly increase the profitability of your construction company. Implementing these five methods is the first step towards tax optimisation and increased profits.
Remember that every company is different and may require an individual approach. That’s why professional advice is so important.
Book a free consultation with me today! I’ll help you optimise taxes for your construction company.
Need help?
Need an accountant? Call me now!
Similar articles:
Business Entertainment
What is business entertainment and can we classify it as business expenses? What is classified as a business entertainment in relation to the clients: Food and drink Presents Cinema or theatre tickets Sports events tickets Entries to the clubs One would think that if...
CIS – what is it, what for and what to do with it?
CIS (Construction Industry Scheme) is a tax deducted by the contractor from the subcontractor's salary and transferred to HMRC. In other words, it is a tax that must be declared during self-assessment tax return and usually the overpaid amount is refunded....
Grant increase for self-employed
We are in the quarantine again! Thankfully the government took under the consideration situation of self-employed people and decided to increase the grant. Increase is from 55% to 80%. It is for two periods: November 2020-January 2021 February 2021 – April 2021 The...