A Simple Tax Guide For Heating & Plumbing Companies

Have you ever been surprised or caught off guard by a tax bill? Or maybe just dread the looming task of sorting through your records and submitting your return?

You wouldn’t be alone. 

Tax is easy when you’re an employee, but business owners get it rough with all the record keeping, tax returns, and responsibility of it all. 

Here’s a simple and actionable tax guide for heating & plumbing business owners.

Click here to skip our top tips for doing your taxes right this year.

When is the best time to prepare for the new tax year?

Organised businesses are prepared for the new tax year before the previous one has even ended. 

This might sound strange if you’re thinking about tax as a standalone self-assessment or corporate tax form you send to HMRC. But the truth is,  handling tax well means keeping things organised from day 1 / April 6. 

Doing this helps keep the headaches and painstaking accounts issues to a bare minimum. That means more time to spend on paid work or things you enjoy.

Why is this important?

The short answer is that tax can be stressful. Other than that:

• Knowing your tax bill well in advance helps you plan and make sure you’ve got funds set aside to pay it.
• Fines for late submissions rack up into the hundreds of £.
• Staying organised from day 1 saves countless hours in the long run (even if it takes a little longer at the start). 
• With good records, you can easily see what’s deductible from your tax bill. This can mean saving a pretty penny when everything’s calculated.

We were speaking to one of our users recently (Dean Jones from Jones the Gas) who told us about his first experience with tax:

What taxes might you need to pay?

Depending on the type of heating & plumbing business you run, you might need to pay a few different types of taxes. Here’s a brief breakdown:

Income tax

• PAYE
• Self Assessment
  

Corporation tax

Limited companies will need to pay corporation tax. You’ll be taxed on any profit your company makes from day-to-day work, investments, and sold assets. Find out more about corporation tax here.

National insurance

Just like you’ll pay national insurance as an employee, you’re expected to pay National Insurance contributions (so long as you’re hitting the minimum earnings. More info on that here).

VAT

Most sole traders won’t need to bother with Value Added Tax (VAT). However, if you’re earning more than £90,000 as of 1 April 2024, you’ll need to register your business.

In addition to these, you may also have to pay business rates (if you’re using an office space), dividends tax, or capital gains tax. 

What are the tax bands?

For self assessment:

For corporate tax

How to do your taxes right this year

1. Record all your expenses and income from day 1

Invoices, bank statements, receipts, and everything else should all be kept and organised. 

Doing this from the very first day of the tax year means you don’t have to spend hours looking for something later down the line – or worse, as you’re filling out the tax return. 

If something does go wrong and HMRC does an investigation, you’ll be expected to produce records dating back up to 6 years. Any missing, disorganised, or lost records and you can just imagine how stressful that would be. You could also run into fines for this. 

2. Keep records digitally & on the cloud

HMRC has no preference over how you keep your records, meaning both paper and digital solutions are acceptable. 

That being said, we strongly recommend going down the digital route. It’s a much easier way to keep track of hundreds – if not thousands – of records without filing cabinets taking up space, time, and energy. 

Storing things on the cloud also means you can file invoices, receipts, etc. away on the spot, rather than when you get back to the office or home. Regardless, it’s important to organise records throughout the year on a regular basis – not all at once at the end.

3. Figure out which expenses you can claim to reduce your tax bill

As a business, your tax bill should be less than the stated tax rate for your band. Why? Because you can claim lots as tax-free business expenses. 

The problem with this process is that so many try to squeeze it in when the deadline is around the corner. Trying to sort through a year’s worth of records to find what expenses you could possibly claim is an absolute nightmare. Things will get missed, and you’ll end up paying extra tax for no good reason.

We’ve put a list of most of the expenses you could claim for your heating business. Use it as you go along the year and set aside anything you know you can claim for. Then, when you come to fill out your tax form, it’s just a matter of going through this list and adding them all to your return.

What kind of expenses can you claim from your tax?

• Landline, mobile, and internet bills
• Materials 
• Purchasing & maintenance of equipment (including computers, phones, tablets)
• Tools & work clothing
• Interest on loans
• Stationery & office supplies
• Postage
• Industry magazines / subscriptions
• Advertising costs
• Vehicles & vehicle maintenance costs
• Travel costs (including fuel)
• Accountancy fees
• Payroll
• Insurance

Remember that all of the above must be for business use only. You can also claim for a lot of this if you work from home / use your home as your office.

4. Submit your tax return well before the deadline

You should aim to submit your tax return at least a couple months ahead of the deadline. Especially in the last month, HMRC helplines are bogged down with calls from businesses and individuals all over the country struggling to fill out their tax forms. It’s not uncommon to have to wait over an hour just to speak to someone on the phone. 

Not to mention, rushing things last minute is a recipe for mistakes, stress, and more tax headaches. 

5. Consider hiring a specialist to help 

Even if you follow all the right advice, tax is still stressful and time consuming. It just happens to be one of those things no business can avoid. 

The only way out is to spend a little money and get help from a tax specialist. Depending on your business, this could be the best solution. You’ll save hours that you can reinvest into your business, and the peace of mind is a huge bonus. 

6. Open a business bank account 

Especially if you’re VAT registered, it’s a great idea to open a second business bank account. We spoke to an admin expert – Michele Ibbs from I’m Your P.A.on one of the episodes of our Podcast – who suggested it be a good idea to take 20% of whatever you earn and set it aside for tax. 

This way, you’ll always have enough set aside to pay your tax bill and it won’t feel like as much of a huge dent in your bank. 

For sole traders, separating personal and business finances will also help keep things organised and systematic.

How can Gas Engineer Software help with all this?

So much of doing your taxes right comes down to proper record keeping. Gas Engineer Software makes it easy for heating & plumbing businesses across to the UK to manage jobs and keep detailed records. This all happens behind the scenes as they go about their days – so you can focus on running your business not stressing about paperwork and tax. 

Learn more about this process here.