Not knowing the expenses you should claim if you have a high street retail store in the UK can be a loss for you! Learn more about them on this blog.
High Street Retail Store Tax UK: Top 10 Expenses You Should Claim From Your Tax as a High Street Retail Store in the UK
Before the 2020 pandemic, Britain’s high street retailers were having a difficult time. The pandemic only accelerated the trend of e-commerce and online shopping. Government-induced lockdowns caused shops and restaurants to close their doors and foreign consumers to change their shopping patterns.
This blog looks at the Top 10 Expenses you should claim from your tax as a high street retail store in the UK. At Sterlinx Global, we provide actionable intelligence to help retailers across the U.K. and Europe.
Saving costs on tax as a high-street retailer
It is essential to save costs as a retailer, especially as the sector can become seasonal, with huge retail chains such as Toys R Us and Maplin collapsing due to rising costs, changing consumer preferences, and external shocks imposed on the industry via the COVID-19 pandemic.
Furthermore, a study by consultancy PwC shows that fewer shops are opening each year, and closures are becoming increasingly common. The study found a total loss of 1,772 stores in 2017 across over 500 major town centres.
To support your revenues, it is important to claim VAT for certain items as expenses as a high street retailer. At Sterlinx Global, high street retail stores can benefit from expert advice to help cut their tax bill.
1. Shipment cost
You may deduct shipping costs. You pay shipping fees to your carrier, and because this is a business expense, you can deduct it from your taxes. Postal services from Royal Mail are generally exempt from VAT as they are subject to regulation and price control. However, this exemption cannot be applied to similar services provided by other suppliers or the Royal mail itself.
Additionally, any stamps that were bought and not used are not subject to VAT (See Notice 701/8 on postage stamps and other philatelic supply materials). If postage stamps are a cost incurred when you deliver your product, you have to charge VAT on the total amount of the product, including those stamps to your customers.
2. Business licence
In general, you can set up a small business without a business licence. All you need to do is set up as self-employed, choose a legal structure for your business and register with HMRC. But many specialised business activities need you to have a business licence. These can be deducted from your VAT bill and save you some pretty high costs.
3. Salary-related expenses
Employee salary costs such as PAYE and pensions are not subject to VAT; these could be recharged if they relate to companies rather than employees. These salary expenses can be deducted from a company’s overall cost.
4. Marketing & advertising costs
For HMRC, showing that particular marketing has benefited your company is not sufficient to claim back VAT. You must be able to show that the marketing that has taken place either online or offline has produced a direct benefit to the business. As a result, while you can claim VAT on Google Ads, for example, you cannot claim the VAT back on a gym membership even if this allows you to network with people and gain new clients.
5. Accounting fees & salaries expenses
The golden rule of VAT states that you can only reclaim costs that are related to the provision of goods and services from your business. Such things as accounting fees or any expenses that are incurred paying salaries can be deducted.
6. Rent expense (if you are renting your space)
As a business, you can deduct your rent as an expense and include services and other costs such as water and council tax. You can claim all such costs you claim as expenses according to HMRC.
7. Repairs and maintenance
HMRC guidelines state that you can claim expenses that are incurred in running property you own as a business. This can dramatically reduce your tax bill.
8. Waste management costs (if you offer dine-in services)
Managing waste is an important business cost and it can be deducted from your final tax bill. However, this is only limited to businesses that offer dine-in services and tax-deductible items ranging from septic tanks to sewer connections.
9. Utilities such as light and water
Electricity and gas are deemed to be important costs for businesses. This counts as business costs, which are tax-deductible as a high street retail store (See HMRC guidance).
10. Insurance costs
Any costs that are directly attributable to insurance policies will be eligible for full VAT claims. Business insurance is standard among restaurants that wish to guard against fires or other hazards.
Here is a list of recently asked questions about the top 10 expenses you should claim from your tax as a high street retail store in the UK
What forms do you complete for a VAT return?
You can get a VAT 407(NI) form, which will require proof that you are eligible for such VAT returns. Be sure not to include any good you are leaving behind or may have returned. You may require a passport or another travel document.
What goods are non-refundable?
Most mail-order goods, such as sales of Internet services are non-refundable. Where you need to make a customs declaration, such goods are not subject to VAT returns. This is equally the case if you need an export licence for a particular good.
VAT on insurance-related products
Under certain provisions from HMRC, there’s an entitlement to recover VAT incurred on supplies of insurance when they’re made to customers belonging outside the UK or directly linked to the export of goods from the UK.
Online shopping has been the major cause of the faltering high street in the UK. The costs that online and e-commerce retailers have to bear are much smaller, and they can reach a larger consumer online. As such, it is important to find strategies to help high street retailers save on their costs and remain competitive.
This blog looks at ways to claim VAT and protect your returns as a high street retailer. For more information, click on Sterlinx Global where you will receive proactive information on how to claim the rights costs from HMRC.