For many self-employed sole traders and small businesses, margins are small and cash flow is vital to ensure they can continue to do business.

To ensure you are making enough money to keep trading in difficult times, typically cash flow consultants will explore ways you can either increase your revenue or lower your overheads and running costs.

However, one method to reduce your expenses is to see what tax allowances and reliefs you can legally claim, as well as other tax breaks you have access to.

Here are some tips for lowering your tax bill.

Deduct Expenses

Self-employed people often do not realise they can claim business-related expenses off of their tax bill.

This can get exceedingly complicated and it is worth talking to your tax accountant, but you can claim deductions on some of your bills if you work from home, travel expenses, and on items that you use for your business.

It can get very complicated, particularly when it comes to the proportions you can write off, but it can save a significant amount of tax, and people who work from home 25 hours per month may be able to claim simplified expenses.

Offset Losses

If you have lost money in a tax year, you can take that balance forward and offset it against your profits from a more successful year, allowing you to reduce the amount you are taxed.

Reduce Payments On Account

Typically, most people who submit tax returns will pay tax in two payment blocks. The first is in January and then the second one in July. These are known as payments on account and are paid in advance of your tax bill.

This is why sometimes you can pay more tax than you expect and get a refund later.

If you know your earnings and therefore your tax will be lower, you can request a reduction of these payments on account, which can help with cash flow issues in the short term. Either request this online or submit form SA303.