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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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, This is my 3rd year as a sole trader, the last 2 years

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This is my 3rd year as a sole trader, the last 2 years my returns have been under £20,000, this year it will be in excess of £60,000, can you offer any advice as to what i could do to offset this outlay.

Can you tell me what you do for a living please. When is your accounting year end?
Customer: replied 3 years ago.


I manufacture and service power factor correction equipment, April 5th



Leave this with me while I draft my answer.

I'm back.

Short of investing in high risk companies through the Enterprise Investment Scheme or the Seed Enterprise Investment Scheme, there isn't much you can do. Research and Development Tax Credits are for companies only.

If you make a profit of £60,000 for 2014/15, you will be paying tax at 40% on about £18,135. If you want to negate the higher rate tax charge, you could invest in capital plant for your business and write it off against one year's profits using the Annual Investment Allowance. Take a look here for more information on AIA.

Alternatively, or perhaps in addition to buying plant and machinery, you could put money into a personal pension plan. Take a look here for more information.

Ther isn't anything you can do to reduce your tax liability that won't involve you spending money I'm afraid.

I hope this helps but let me know if you have any further questions.

Customer: replied 3 years ago.

Would it be possible to purchase a car that my wife would use for work, ( she works nights ) but would be available for my business use during the days when i don't need to use my van.


You could do that but you would need to disallow a proportion of the capital allowances based on the split between private and business usage. You cannot claim Annual Investment Allowance on cars I'm afraid so you would be limited to claiming 18% or 8% (depending on CO2 emission levels) on a reducing balance. That is, unless you buy a car with very low CO2 emissions in which case you can claim a first year allowance of 100% less the private use adjustment. Take a look here for information on cars and capital allowances.

An alternative to capital allowances on cars is to claim the mileage allowance at the rate of 45p per mile for the first 10,000 business miles and 25p per mile thereafter.
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