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By Running a small business in London comes with exciting opportunities—and complex tax responsibilities. At TT Accountancy, we help London entrepreneurs minimize tax liabilities, maximize savings, and stay compliant with HMRC regulations.
Here are our top 10 tax tips to keep more of your hard-earned revenue while avoiding costly mistakes.
1. Register Correctly & On Time
✅ Sole traders must register with HMRC by October 5th in their second tax year.
✅ Limited companies must register within 3 months of starting business.
🚨 Penalty: £100–£1,600+ for late registration.
“Many clients come to us after missing deadlines. Proactive registration prevents fines.”
— TT Accountancy Tax Advisor
2. Claim All Allowable Expenses
Most London businesses overpay taxes by missing deductible costs:
✔ Home office (portion of rent, utilities, internet)
✔ Travel (Tube fares, train tickets, mileage at 45p/mile)
✔ Professional fees (accounting, legal, software subscriptions)
✔ Marketing (website, ads, business cards)
💡 Keep digital receipts (use apps like Dext or Xero) for hassle-free claims.
3. Use the Trading Allowance
If your self-employed income is under £1,000/year, you:
✅ Don’t need to register for Self-Assessment
✅ Pay zero tax on this income
4. Optimize Your Salary & Dividends (Ltd Companies)
Paying yourself £12,570/year salary (2024/25 tax-free allowance) + dividends is 20% more tax-efficient than salary alone.
📌 Example Savings:
| Method | Tax Paid |
|---|---|
| £50k salary | £7,500 |
| £12.5k salary + £37.5k dividends | £3,490 |
5. Leverage R&D Tax Credits (If Eligible)
London’s tech/innovative businesses can claim up to 33% of R&D costs:
🔹 Software development
🔹 Product/process improvements
🔹 Engineering projects
💷 Average claim: £50,000+ for eligible SMEs
6. Prepare for Making Tax Digital (MTD)
Since 2022, VAT-registered businesses must use MTD-compatible software (e.g., Xero, QuickBooks).
🚨 Non-compliance fines apply
📅 2026 Update: MTD for Income Tax starts for sole traders earning >£50k/year.
7. Use Capital Allowances for Equipment
Claim up to 100% on qualifying assets:
💻 Laptops, phones, machinery
🚗 Electric vehicles (100% first-year allowance)
🪑 Office furniture (Annual Investment Allowance)
8. Don’t Miss CIS Deductions (Construction Industry)
If you’re a contractor/subcontractor:
✔ Register for CIS
✔ Deduct 20% (or 30%) from subcontractor payments
✔ File monthly returns
🚨 Penalty: £100–£3,000 for late/missing filings
9. Plan Ahead for Tax Bills
Avoid cash flow shocks by:
📌 Setting aside 20-30% of profits monthly
📌 Using HMRC’s Time to Pay if struggling
📌 Estimating liabilities via quarterly reviews
10. Work With a London Accountant
A specialist saves 3x their fees by:
✔ Identifying overlooked deductions
✔ Preventing HMRC audits
✔ Providing year-round tax planning
💡 *”Our clients save an average of £8,500/year in optimized taxes.”*
— TT Accountancy Client
Need Expert Tax Help?
TT Accountancy offers:
✅ Fixed-fee tax services (no surprises)
✅ Xero/QuickBooks integration
✅ R&D tax credit specialists
✅ HMRC dispute resolution
📞 Call 02039741266
📧 thomas@ttaccountancy.com
🌐 Book a Free Consultation
“Switching to TT Accountancy cut our tax bill by 28%—wish we’d done it sooner!”
— London E-commerce Business
