You should have:
1. Claimed every tax deduction you can. Taxes are on the rise so make sure you do not pay Mr Darling one penny more than you have to. For example, if you do any work from home you can claim part of your home’s running costs: mortgage interest, council tax, gas and electricity etc. Many accountants do not understand the home office deduction and do not claim it for their clients or do not make a big enough claim. If you ever use one of your cars for business (even just a tiny bit) you can claim part of your running costs.
2. Claimed capital allowances. Assets are cheap in a recession and you can claim capital allowances on any asset you use in your business. If you use something partly for personal reasons then a partial claim is still possible. If you buy a new commercial property then an immediate tax deduction of up to £50,000 can be claimed for integral features. Again, many accountants do not know about this deduction and do not claim it.
3. Thought about starting a company. With personal income tax rates rising to over 50 per cent, sheltering your money inside a company could prove attractive. Companies are most powerful when you reinvest profits, rather than extract them as a salaries or dividends. If your profits are taxed at 21 per cent or 22 per cent you will have a lot more cash left over to grow the business than someone who pays tax at over 40 per cent or 50 per cent!
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