The Association of Chartered Certified Accountants has this tax advice for small businesses to consider.

The Association of Chartered Certified Accountants has compiled this list of five top tips for small businesses to make the most of their hidden tax allowances.

1. Small profits tax rate
If you run a company and its taxable profits are less than £1.5m, you could pay a lower rate of tax, but you need to make sure that you claim the relief. There’s guidance on the calculations on HMRC‘s website.

2. Capital Allowances
Don’t hesitate to invest in new plant and machinery up front; it’s much more tax efficient to buy rather than rent for the first £100,000 of expenditure (though this will fall to £25,000 in April 2012). If you are able to borrow money to fund your purchase, the interest will be tax deductible also.

3. Home use: Do you work from home?
If so, you can claim for the related costs of lighting and hearing, and even against your mortgage interest. However, you must be aware that if you convert part of your home permanently for business use, you may find yourself liable for business rates, which will affect the tax free nature you may make from any profit from selling your home.

4. Clothes and tools
If you have a uniform or need to wear protective clothing, make sure that you claim the right tax deductions. As well as just the initial cost of buying the clothing you can claim for upkeep and cleaning.

5. Environmentally friendly transport
If you use a vehicle for your business, it is important to keep accurate records of its use, for both business and non-business purposes – you can claim for the maintenance and running costs. If you’re looking to replace your vehicle, don’t forget to consider its ‘green credentials’ – this can save you money in the long run through tax breaks.

For more about making the best use of tax law, see: A guide to claiming legitimate business expenses.