As another tax year rolls on, it’s easy to get caught up in the day-to-day running of your business or managing your personal finances. However, taking a few moments to review available tax allowances can make a significant difference to your bottom line. At Gross Klein Wood Accountants in Peterborough, we’re dedicated to helping you maximise your tax efficiency. For the 2025/26 tax year, here are three key allowances you absolutely shouldn’t miss.
1. Claim Your Home Office Allowance If You Work From Home
Working from home has become the new normal for many, whether you’re a sole trader, a limited company director, or an employee. If you regularly use a part of your home for business, you might be eligible to claim tax relief for the additional costs incurred.
HMRC offers a simplified flat-rate allowance of £6 per week (£312 annually) for homeworking. This is a straightforward way to claim without needing to keep detailed records of every utility bill. However, if your actual costs are higher, you can choose to calculate and claim a proportion of your household expenses, such as heating, electricity, and even broadband. This method requires more meticulous record-keeping, but could lead to a more substantial claim.
For self-employed individuals, this allowance is claimed via your Self Assessment tax return. Limited company directors can claim this as an allowable business expense through their company, reducing their Corporation Tax liability. Don’t leave money on the table – a little saving here can add up over the year.
2. Utilise Your £1,000 Trading/Property Allowances
Do you have a side hustle, engage in casual work, or earn a little extra income from renting out a room or property? The £1,000 trading allowance and property allowance are designed specifically for individuals with small amounts of miscellaneous income.
If your total gross income from trading activities or property income is £1,000 or less in the 2025/26 tax year, you generally won’t need to pay tax on it or even declare it to HMRC. This is known as “full relief.” This can be a real boon for hobbyists or those just starting out with a small venture.
Even if your income exceeds £1,000, you can still benefit from “partial relief.” You can deduct £1,000 from your gross income, paying tax only on the remaining amount. This allowance can be particularly beneficial if your expenses for these activities are low. It’s crucial to compare this allowance against your actual expenses – if your expenses are higher than £1,000, it might be more tax-efficient to claim those instead. We can help you determine the best approach for your specific circumstances.
3. Check if the Annual Investment Allowance (AIA) Helps with New Kit
For businesses looking to invest in new equipment, machinery, or even certain fixtures for their premises, the Annual Investment Allowance (AIA) is a fantastic way to reduce your taxable profits. The AIA allows businesses to deduct 100% of the cost of qualifying plant and machinery from their profits, up to a generous annual limit of £1 million.
This means if you purchase a new computer system, vehicles (excluding cars), tools, or other eligible equipment, you can effectively write off the entire cost against your profits in the year of purchase. This can significantly reduce your Corporation Tax or Income Tax bill, freeing up cash flow for other areas of your business.
The AIA is available to companies, sole traders, and partnerships, making it a powerful tool for businesses of all sizes. Given the substantial limit, many small and medium-sized businesses can claim full relief on most of their capital expenditure within a single tax year.
Don’t Underestimate the “Little Things”!
These allowances might seem like “little things,” but they can collectively lead to substantial tax savings. Missing out on them is essentially leaving money on the table. Tax rules can be complex and change year on year, which is why having expert guidance is invaluable.
At Gross Klein Wood Accountants in Peterborough, we pride ourselves on providing clear, actionable advice tailored to your needs. Whether you’re an individual, a sole trader, or a limited company, we can help you navigate the tax landscape and ensure you’re taking advantage of every allowance available for the 2025/26 tax year.
Don’t wait until the last minute! Get in touch with our friendly team today for a review of your tax position. You can reach us on 01733 311 896 or email info@grosskleinwood.co.uk. Let us help you keep more of what you earn.
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