The Real Cost of Materials: Are You Accidentally Working for Free?

If you’re a builder or trades business, you probably keep an eye on day rates and quote totals.

There’s a quieter problem that destroys profit in the background: under-recovering materials and labour.

When materials cost recovery isn’t built properly into your construction pricing, you can look busy, have cash going through the bank and still be working for free (or very close to it).

Where Builder Profit Leaks Really Happen

Most builder profit leaks aren’t dramatic. They come from lots of small “it doesn’t really matter” decisions that add up, such as:

  • Charging only the merchant invoice for materials, with no allowance for wastage, delivery or credit terms
  • Not charging for time spent collecting, ordering, returning or sourcing materials
  • Under-estimating labour by “a day or two” to win the job
  • Allowing variations and extras on site without updating the price
  • Covering small items yourself – screws, fixings, silicone, blades because they “feel too small to bill”

Each one seems minor. Together, they quietly erode your margin on every job.

The Real Cost of Materials (Not Just the Invoice)

When you look at a materials invoice, it’s easy to think, “I’ll just pass that on to the client.”

But the real cost of materials is often much higher than the number on the page.

Things that should be included in your materials cost recovery:

  • Purchase price – the merchant invoice
  • Wastage and breakage – off-cuts, mis-cuts, damaged items, over-ordering
  • Delivery charges – merchant delivery or your own time and fuel collecting
  • Admin time – specifying, pricing, ordering, checking and chasing
  • Credit terms and cash flow – the fact you often pay out before you’re paid
  • Small consumables – fixings, sealants, tapes, blades, PPE, etc.

If you only recharge the invoice amount, you’re quietly subsidising the job out of your own pocket.

The Hidden Cost of Labour

Labour under-recovery is just as damaging as materials.

Most builders think about labour in days on site. But a realistic labour cost needs to allow for:

  • Actual paid hours – including set-up, clear-down and breaks
  • Travel and collection time – getting to site, going for missing materials
  • Supervision and snagging – checking work and returning to fix issues
  • Quote and paperwork time – surveys, pricing, invoices, chasing payment
  • Overheads – vans, insurance, tools, software, phones, office costs

If your day rate only covers the time “on the tools”, all the other time you work is effectively unpaid.

What “Working for Free” Looks Like in Real Life

On paper, a job might look fine: the price feels sensible, the client is happy and the team is busy.

But once the job is finished and you quietly compare:

  • What you thought materials would cost, versus what they actually cost
  • How many days you allowed, compared with how many days you actually spent
  • The extra trips to merchants and extra time on variations that never got added to the bill

…it’s common to find that the true profit on the job has shrunk to almost nothing.

You’ve carried the risk, paid the wages, juggled the cash flow and ended up with a return that doesn’t reflect the effort or the stress. That’s what “accidentally working for free” looks like.

How to Protect Your Margin on Every Job

To stop these builder profit leaks, your construction pricing needs to:

  1. Build in a proper materials margin
    Include wastage, delivery, admin time and a sensible mark-up for handling the risk and hassle of materials.
  2. Factor in all labour time, not just on-site time
    Travel, collections, quoting, snagging and admin should all be covered within your rates.
  3. Set a target profit margin and stick to it
    Decide the minimum margin you will accept and price to achieve it – not just to “win the job”.
  4. Treat small items as part of the job cost, not a freebie
    Either allow for consumables within your rates or make sure your materials cost recovery includes them.
  5. Review your numbers regularly
    Compare quoted vs actual materials and labour on completed jobs. Wherever you see a leak, adjust your pricing and process.

Next Step: Check If You’re Working for Free

If you’re flat out but not seeing the profit you expect, it’s very likely your materials cost recovery and labour pricing need attention.

A simple next step:

  • Pick a handful of recent jobs
  • Compare what you quoted for materials and labour with what you actually spent
  • Ask: “If I did this job again on the same terms, would it be worth it?”

If the honest answer is “no”, that’s a clear sign your pricing model is helping others more than it’s helping you.

If you’d like help reviewing your construction pricing and stopping these profit leaks, we can go through your jobs with you, in plain English, and build a pricing approach that protects your margin instead of giving it away.

Please see another An Accounting Gem blog:  https://www.aag-accountants.co.uk/electric-cars-and-the-2025-budget/

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Electric Cars and the 2025 Budget

What UK Small Businesses Really Need to Know

There’s been a lot of chatter about electric cars, new taxes and whether the government has “gone off” EVs. If you’re running a small business, that noise isn’t very helpful.

You just want to know, in plain English:

  • What’s actually changing?
  • When does it kick in?
  • What does it mean for our costs and our tax?

This guide walks through what’s been announced so far, in normal language, and then looks at how you might respond in your business.

  1. What’s changing for electric cars?

A new mileage-based tax from April 2028

From the 2028/29 tax year, fully electric cars will be charged 3 pence per mile, and plug-in hybrids 1.5 pence per mile.

Think of it as a small extra cost built into every mile driven – broadly similar in spirit to how fuel duty is built into the cost of petrol and diesel. It doesn’t stop you using an EV, but it does mean the “running cost” number you have in your head needs to be updated.

Road tax (VED) from April 2025

From April 2025, electric cars are no longer exempt from Vehicle Excise Duty (VED) – road tax. Previously, fully electric cars didn’t pay VED at all. From April 2025 that exemption disappears, and electric cars are brought into the normal road-tax system alongside petrol and diesel vehicles.

So if you’ve been used to “no road tax” on an EV, that particular perk is coming to an end.

Has the government “gone off” EVs?

Not really. The broader policy direction still supports EVs as part of the future vehicle mix, with continued focus on charging infrastructure and cleaner transport in general. What’s really happening is that the tax system is being adjusted so EVs aren’t sitting quite as far outside the normal rules as they did in the early days.

  1. How the HMRC mileage rules fit in

For business owners, the familiar HMRC mileage rules still apply and they’re actually quite straightforward once you line them up.

Staff using their own car (including EVs)

When an employee uses their own car for business, the standard HMRC mileage rates are the same whether that car runs on petrol, diesel or electricity:

  • 45p per mile for the first 10,000 business miles in a tax year
  • 25p per mile for business miles above that

There isn’t a special HMRC “EV mileage rate” under this scheme, an electric car is simply treated as “a car”.

Company-owned EVs

If the car belongs to the business (a company car), you don’t use those 45p/25p rates in the same way.

Instead, HMRC expects you to work with an advisory electricity rate for reimbursing the cost of electricity used on business journeys. Recent guidance makes a distinction between charging at home and charging in public, and the basic idea is:

  • What you reimburse should be linked to the electricity actually used for business miles; and
  • It should be structured so the reimbursement is treated correctly for tax and doesn’t accidentally turn into a taxable benefit.
  1. So where does this leave small businesses?

For a small business that already uses EVs, or is thinking of switching, the short answer is:

EVs are no longer “tax-free”, but they can still make sense.

You need to factor in:

  • Road tax (VED) from April 2025; and
  • A mileage-based tax from April 2028

At the same time, the rules for reimbursing business use are clear and workable, as long as you stick to the official mileage and electricity frameworks.

If staff use their own EVs

If your staff use their own electric cars for business journeys, you can still reimburse them at the usual 45p/25p rates:

  • It keeps things simple
  • Payments sit within the tax-free limits
  • Staff don’t lose out just because they drive an electric car

If you provide a company EV

If you provide a company EV and reimburse charging:

  • You follow the advisory electricity rate; and
  • You follow the guidance around home versus public charging.

Again, the aim is to keep everything transparent and on the right side of HMRC.

  1. Making the decision: EV vs petrol or diesel

Before replacing or adding vehicles, it now makes sense to sit down and do a proper “total cost over time” comparison rather than relying on old assumptions.

For an EV, that means looking at:

  • Purchase or lease cost
  • Road tax from 2025
  • Electricity costs at home, at work and on public chargers
  • The mileage-based tax from 2028
  • Maintenance and insurance
  • Any reimbursements you expect to pay staff

Then you put that next to a petrol or diesel vehicle over the same period and include:

  • Fuel and fuel duty
  • Road tax
  • Maintenance and insurance
  • Any mileage reimbursements

Once you see the numbers side by side over three to five years, the decision is usually much clearer and much less emotional.

  1. Why charging arrangements and mileage records really matter

How and where you charge

How and where the car is charged can make a big difference to your numbers:

  • Charging at home or at your premises often works out cheaper than heavy reliance on public rapid chargers
  • Combined with accurate mileage logs and the correct HMRC rates, you get a realistic cost per mile, even with the new taxes built in

For many businesses with modest or predictable mileage, that could still make an EV a very sensible choice.

Record-keeping goes up a gear

Because:

  • There is a tax based on miles driven, and
  • The reimbursement system is based on business mileage,

…you really do need clean records.

It’s worth making sure every business journey is logged with:

  • Date
  • Purpose
  • Mileage

…and that business and private use are clearly separated, especially where a vehicle is used for both.

Good records:

  • Make budgeting easier
  • Support your decisions if anyone asks questions later
  • Help you avoid awkward disputes over expenses
  1. Keeping your team on the same page

It also helps to be clear with your team about how you handle EV costs.

If you reimburse mileage or charging, set out in writing:

  • Whether you’re using the standard mileage rates for personally-owned cars
  • Or the electricity rate for company EVs
  • How you treat home charging versus public charging

A short, plain-English policy can:

  • Avoid confusion
  • Prevent arguments
  • Give staff confidence that they’re being treated fairly, whatever they drive
  1. The adviser’s view: treat EVs as a normal business decision

In many owner-managed businesses you’ll see a mix of arrangements:

  • Directors using their own cars
  • A couple of vans
  • Maybe one or two company cars

In that world, the change in EV taxation doesn’t mean “never touch an electric car again.”

It means:

  • Don’t choose an EV solely because it used to have no road tax; and
  • Don’t reject an EV just because that particular advantage is going

Instead, you treat it like any other business decision. You look at:

  • Total cost of ownership
  • Your mileage patterns
  • Your charging options
  • The tax rules you’ll be working under

…and then you decide what genuinely makes sense for your business.

For firms with lower or occasional mileage, electric cars may still offer good value: simpler maintenance, more stable energy costs and a tidy fit with the existing mileage and reimbursement rules.

For higher-mileage operations, especially where most charging is done in public, the return of road tax and the new mileage charge simply make it more important to run the numbers carefully and go in with your eyes open.

  1. The bottom line for small businesses

The 2025 Budget doesn’t kill the case for electric cars in small businesses but it does change the ground rules:

  • Electric cars will pay road tax from April 2025
  • Electric and plug-in hybrid cars will pay a mileage-based tax from April 2028

They’re no longer the “free tax” option they once were, but they are still a realistic option if you plan properly.

If you:

  • Take the time to understand your real costs
  • Keep decent mileage and charging records
  • Use the official HMRC mileage and reimbursement rates

…EVs can still be a sensible, controllable part of your transport mix.

If you ignore the changes, you’re more likely to run into surprises later, whether that’s in tax, cash flow or compliance.

Please see another An Accounting Gem blog: https://www.aag-accountants.co.uk/when-work-goes-quiet-10-cost-free-marketing-ideas-for-small-trades-businesses/

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When Work Goes Quiet: 10 Cost-Free Marketing Ideas for Small Trades Businesses

(Electricians, plumbers, builders, decorators, roofers, gardeners, handymen; this one’s for you.)

Introduction

When the phone is ringing off the hook, it’s easy to believe work will keep turning up forever. When enquiries slow down, blaming “the economy” doesn’t pay the bills.

The tradesmen who stay busy in tougher times are the ones who keep their name in front of people, even when they’re on a tight budget.

Below are ten free, low-effort marketing ideas you can use to get your phone buzzing again and keep your diary full.

  1. Sort Out Your Google Business Profile

Why it matters

When someone searches “plumber near me” or “electrician Ipswich”, Google shows local businesses first. If you’re not there, or your profile looks half-finished, you’re losing easy work.

What to do

Claim and verify your Google Business Profile (if you haven’t already).

Add:

Correct phone number and email

Your services (e.g. boiler repairs, rewires, extensions)

A simple description in plain English

Upload photos: vans, team, before/after shots (no need for fancy cameras, your phone is fine).

Ask happy customers to leave a genuine review (no bribing or fake reviews, it breaks the rules).

Result

You’ll show up more often when locals search things like “[trade] near me”, and you’ll look more trustworthy than the individual with no photos and one review from 2019.

  1. Use Facebook & Local Groups Like a Noticeboard

Why it matters

Your ideal customers are scrolling Facebook in the evening while watching television. Local Facebook groups are often where people ask, “Does anyone know a good [trade]?”

What to do

Join local community groups (e.g. “Ipswich Community”, “Mums in [Town]”, “[Town] Trades & Services”, “IP4 Community”).

Once a week, post something useful, not salesy, for example:

“5 things to check before calling an electrician”

“Simple tip to stop your gutters overflowing this winter”

Share photos of recent jobs (with the customer’s permission and no addresses visible).

When people ask for recommendations, reply politely with your name, what you do and your phone number/website.

Result

You become “that reliable person” everyone tags when somebody asks for a plumber, builder, decorator etc.

  1. Turn Happy Customers into a Mini Sales Team

Why it matters

Word-of-mouth is still the number one way trades get work. Most people are happy to recommend you, they just need a gentle nudge.

What to do

After finishing a job and the customer is clearly pleased, say:
“If you know anyone who needs a [trade], I’d really appreciate you passing my details on.”

Give them a simple referral text they can forward, for example:
“This is Jem, the electrician who sorted our fuse board. Really good, turned up when he said he would: [phone number].”

Add a small line to your invoice or email:
“We grow through recommendations, if you’re happy, please pass our name on.”

Result

You’ll quietly build a network of people who send you work, for free.

  1. Make Your Van a Moving Billboard

Why it matters

You’re already driving around town every day. A clear, professional van sign turns every journey into advertising.

What to do

Even if you can’t afford a full wrap yet:

Make sure your existing signage is:

Readable from a distance (big, clear wording, not a paragraph of text).

Includes: trade, main services, website/phone and area (e.g. “Plumbing & Heating – Ipswich & Surrounding”).

If you don’t have signage yet, start small with simple, clean magnetic signs.

Park where people can see you: on busy roads (safely), outside suppliers, or near jobs (with permission).

Result

Locals see your name repeatedly so when something breaks, they already know who to call.

  1. Collect Photos & Reviews as You Go

Why it matters

People don’t know if you’re any good until they see proof. Before/after photos and short reviews do the selling for you.

What to do

Before a job, ask:
“Do you mind if I take a quick before/after photo for my website/Facebook?”

Store photos in a labelled album on your phone (e.g. “Bathrooms”, “Kitchens”, “Rewires”).

Ask for short reviews on:

Google

Facebook

Any trade directory you’re on (e.g. Checkatrade, MyBuilder, Rated People, etc.).

Reuse reviews on your website, Facebook page and quote templates.

Result

When people look you up online, they see real work and real customers, not just your word for it.

  1. Use WhatsApp Properly

Why it matters

Most customers are more comfortable sending you photos and questions over WhatsApp than writing emails. Used well, it keeps communication clear and quick.

What to do

Create a WhatsApp Business profile (free app):

Add your opening hours

Add a short description and website link

Set up simple auto-replies for out-of-hours, such as:
“Thanks for your message, I’m on site right now but I’ll get back to you this evening.”

Ask customers to send photos before you visit so you can:

Filter time-wasters

Give rough estimates quicker

Result

Less phone tag, fewer wasted visits and a smoother experience for your customers.

  1. Claim Free Listings on Trade & Local Directories

Why it matters

Many customers still use local directories and trade sites to find someone “proper” rather than just scrolling social media.

What to do

Search: “free [plumber/electrician/builder] directory UK” and “[your town] business directory”.

Claim your free listing on:

Local council/Chamber of Commerce directories

Community/“shop local” websites

Trade-specific directories that offer a free tier

Make sure each listing has:

The same name, phone, email and website

A short, clear description of what you do

A link to your Google reviews or website

Result

You gain extra ways for people to find you and more links pointing to your website and Google profile (which helps your search rankings).

  1. Share Simple Tips, Not Just Sales Posts

Why it matters

Nobody wants to follow an account that just shouts “BOOK NOW!” every day. Helpful tips keep you in people’s minds without annoying them.

What to do

Once or twice a week, share one short, practical tip, for example:

Plumbers: “How to safely turn off your water in an emergency.”

Electricians: “Why your sockets keep tripping and when to call someone.”

Builders/roofers: “How to spot early signs of damp or roof damage.”

Film it as a 30–60 second video on your phone.

Post it on Facebook, Instagram and your Google Business Profile.

Result

People start to see you as the helpful expert, not just another advert and they remember you when a bigger job comes up.

  1. Make It Obvious How to Contact You

Why it matters

You’d be amazed how many trades lose work because people can’t easily find a phone number or don’t know what happens next.

What to do

On your website/Facebook page, make sure it’s crystal clear:

How to contact you (phone, WhatsApp, contact form, email)

When you usually reply

What happens next (e.g. “We’ll ask for a few photos, give you a rough estimate, then arrange a visit”).

Add one main call-to-action everywhere:

“Call now to book a free quote”

“Send photos on WhatsApp for a quick estimate”

Check all contact buttons/forms actually work.

Result

Less confusion, fewer missed leads and more people actually getting in touch instead of giving up.

  1. Turn One Job into Several Pieces of Content

Why it matters

You’re already doing the work so you might as well get extra marketing from every job.

What to do

From a single job:

Take a couple of photos before, during and after.

Write two or three sentences:
“We helped a family in [area] by [solving problem].”

Turn that into:

A Facebook post

A short paragraph for your website

A quick video talking through what you did

A photo post on your Google Business Profile

Result

You build up a steady stream of proof that you’re active, reliable and doing good work locally without staring at a blank screen trying to think of what to post.

Conclusion & Next Steps

In the trades, it’s easy to get trapped in a cycle of: busy → quiet → panic → busy again. The trades that stay steady are the ones that treat marketing as part of the job, not something they only do when the phone stops ringing.

You don’t need fancy branding or big budgets. You just need to:

Show up where your customers are already looking

Make it easy for people to see your work

Make it even easier for them to contact you

Call to Action: Business Planning Vision Days

If you’d like help turning these ideas into a simple, realistic 12-month plan for your business including pricing, profits and getting your evenings back, that’s exactly what our Business Planning Vision Days are designed to do.

We’ll sit down with you, look at your numbers, your goals and your current marketing, and build a plan you can actually follow without needing a marketing degree.

If that sounds useful, book a free 30-minute chat to see if it’s a good fit for you, or join our mailing list for more plain-English tips for small trades and local businesses.

Please see another An Accounting Gem blog:  https://www.aag-accountants.co.uk/when-uncertainty-strikes-10-cost-free-marketing-ideas-for-small-trades-local-businesses/

 

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When Uncertainty Strikes: 10 Cost-Free Marketing Ideas for Small Trades & Local Businesses

When Uncertainty Strikes: 10 Cost-Free Marketing Ideas for Small Trades & Local Businesses

Introduction

When work is flowing in, you can afford to let word of mouth do most of the work. But when enquiries slow down and money feels tight, blaming “the economy” won’t fill your diary.

The most successful trades and local business owners don’t just wait for the phone to ring, they go out and get the work.

Here are ten free, low-effort marketing ideas to get your name out there, keep you seen locally and generate more enquiries.Optimise Your Google Business Profile

Why it matters: Most people now use Google to find local trades and services.

Quick wins:
Make sure your profile is claimed and verified. Add your correct opening hours, areas you cover, the type of jobs you do and clear photos of your work. Ask happy customers to leave honest reviews. Don’t offer rewards for good reviews, that’s against platform rules and UK advertising guidance.

Result: You show up more often when people nearby search for things like “plumber near me” or “electrician in [your town]”.Use Social Media to Stay Visible

Why it matters: People like to see the person behind the business before they get in touch.

Quick wins:
Pick one main platform your customers actually use, for many trades that’s Facebook or Instagram (LinkedIn can help if you deal with landlords, letting agents or other businesses). Post once a week: before-and-after photos, a short tip or a common question you get on the job. Reply to comments and messages quickly.

Result: You stay in front of past and future customers without spending on ads.Team Up with Other Local Businesses

Why it matters: Working together puts you in front of more people who already trust the person recommending you.

Quick wins:
Partner with non-competing businesses who share your customers, for example, a builder with a plumber, electrician and decorator; or a gardener with a fencing company. Swap recommendations, share each other’s posts or put each other’s cards in your vans and on your websites.

Result: Regular referrals both ways, at no cost.Run a Simple “Spotlight” Email

Why it matters: A short email to people who already know you can bring in repeat work and referrals.

Quick wins:
Collect email addresses from customers who are happy for you to contact them. From time to time, send a short email with a recent job story, a seasonal reminder (for example, boiler checks before winter) or a simple checklist. Use free email tools and always include an easy unsubscribe link.

Result: You stay in their mind so they think of you first and pass your details on.Freshen Up Your Website for Google

Why it matters: Google prefers up-to-date, useful pages.

Quick wins:
Look over your main pages; home, services, about, contact. Update any old information, add the areas you cover and mention the jobs you most want more of (for example, “bathroom installations in Ipswich” or “emergency electrician in Colchester”).

Result: Better chances of showing when someone nearby searches for the type of work you want.Host a Short Q&A or Demo Online

Why it matters: Seeing you explain things builds trust before you ever visit a home or site.

Quick wins:
Use free versions of tools like Zoom or go live on Facebook/Instagram for 20 minutes. Answer common questions (for example, “What to ask a builder before you sign a quote”). Tell people how to sign up and be clear about how you’ll use their details, giving them simple options for future contact.

Result: People see you as helpful and knowledgeable and are more likely to call you for paid work.Get on Free Directories

Why it matters: Many customers search trade and local directories before they pick up the phone.

Quick wins:
Search for “free [your trade] directory UK” or “free local business directory [your town]”. Claim your listing and fill it in properly; short description, areas covered, phone number, website and photos.

Result: Extra places for people to find you online and more links pointing to your website.Ask Customers to Share Their Experience

Why it matters: Real photos and stories from customers are more powerful than any advert.

Quick wins:
After a job, ask if you can take a quick photo (with permission) and share it, tagging the customer if they’re happy. You can also invite customers to share their own photo or a few words about the job on your page. If you offer any kind of thank-you, keep it small and clear, with simple terms.

Result: Free, genuine content that shows the quality of your work and builds trust.Make Your Website’s Next Step Obvious

Why it matters: People are more likely to get in touch if you tell them clearly what to do next.

Quick wins:
Check every page on your website. Does each one clearly say what you want people to do? For example: “Call now for a free quote”, “Send us your job details” or “Request a call back”. Use simple words and buttons or links that stand out.

Result: More visitors turning into phone calls, messages and bookings.Turn Your Best Tips into Short Videos

Why it matters: Short videos get more attention than long blocks of text.

Quick wins:
Take common questions you get on jobs and record a 30–60 second video on your phone explaining the answer. You can edit with free tools or post straight to Facebook, Instagram or TikTok. Add a short caption and your contact details.

Result: More people see your face, hear how you talk and feel comfortable contacting you.

Conclusion & Call-to-Action

In today’s stop-start economy, standing still is the quickest way to slow down your work. The trades and local businesses that keep showing up, talking to customers and trying new things are the ones that stay busy.

If you’d like help turning these ideas into a simple 12-month plan you can actually follow, we can help:

Book a free 30-minute discovery call to talk through your business, your goals and the type of work you want more of.

If we’re a good fit, we’ll discuss how a full Business Planning Vision Day can help you bring in more of the right jobs and build steady, profitable growth.

Please see another An Accounting Gem blog: https://www.aag-accountants.co.uk/%f0%9f%8e%84-christmas-parties-and-staff-gifts-whats-tax-deductible/

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🎄 Christmas Parties and Staff Gifts: What’s Tax-Deductible?

As the festive season approaches, many small businesses start planning staff celebrations and gifts to say thank you for a year of hard work.

How much of your festive generosity is tax-deductible and what do you need to watch out for with HMRC rules?

Here’s a simple guide to what is allowed, what’s not and how to keep your celebrations tax-efficient and compliant.

🍽️ 1. The Staff Christmas Party — HMRC’s Annual Event Exemption

HMRC allows you to provide an annual event such as a Christmas party or summer gathering without it being treated as a taxable benefit for your employees.

To qualify for this tax exemption, your event must meet three key conditions:

It’s an annual event (like a Christmas or summer party).
It’s open to all employees (not just directors or selected staff).
The total cost is £150 or less per head (including VAT, food, drink, entertainment and any transport or accommodation).

If all three are met:

  • The cost is tax-deductible for your business.
  • There’s no benefit-in-kind charge for staff.
  • You can reclaim VAT (if applicable).

If you go over £150 per head, even by £1, the entire amount becomes taxable, not just the excess.

💡 Tip: The £150 limit applies to the total of all annual events (e.g., if you host both a summer and Christmas party). You can split the allowance between them.

🎁 2. Staff Gifts — The Trivial Benefits Rule

Small staff gifts can also be given tax-free under HMRC’s “trivial benefits” exemption, provided they meet specific criteria.

To qualify, each gift must:

  • Cost £50 or less per person (including VAT)
  • Not be cash or a cash voucher (gift cards for stores or experiences are fine)
  • Not be a reward for work or part of an employee’s contract
  • Not be part of a salary sacrifice arrangement

Examples that qualify:

  • A supermarket or Amazon voucher worth £30
  • A bottle of wine, box of chocolates or festive hamper
  • A birthday or Christmas gift

Directors of close companies (usually small limited companies) have an annual cap of £300 total per tax year under this rule.

🧾 3. What You Can’t Claim

Some common festive expenses are not tax-deductible, including:

  • Client entertaining (meals, drinks, or gifts for customers)
  • Cash bonuses or performance rewards (treated as salary)
  • Non-qualifying staff events or gifts over the HMRC thresholds

These may still be great for morale or client relationships but remember, they won’t reduce your tax bill.

💰 4. VAT and Record-Keeping

If your business is VAT-registered, you can usually reclaim VAT on staff entertaining costs but not for partners or family members attending the same event.

Keep clear records of:

  • Guest lists (to confirm it was a staff event)
  • Invoices and receipts
  • Cost breakdowns (including VAT)

These details can make all the difference if HMRC ever reviews your accounts.

Please also see: https://www.gov.uk/expenses-benefits-social-functions-parties

💎 How An Accounting Gem Can Help

At An Accounting Gem, we help small businesses enjoy the festive season without stressing over tax rules.

We’ll guide you on:

  • Which costs are fully deductible
  • How to stay within HMRC limits
  • Smart ways to give staff gifts or rewards tax-efficiently
  • Accurate bookkeeping to support your claims

Enjoy celebrating your team’s success, we’ll take care of the numbers behind it.

📞 Get in touch to review your year-end expenses and make sure you’re claiming everything you’re entitled to.

Please see another An Accounting Gem blog: https://www.aag-accountants.co.uk/sole-trader-or-limited-company-choosing-the-best-structure-for-your-business/

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Sole Trader or Limited Company? Choosing the Best Structure for Your Business

When starting or growing a business, one of the biggest early decisions is how to structure it. Should you be a sole trader or set up a limited company?

Both have advantages and the right choice depends on your goals, income and how much responsibility you want to carry.

This simple guide breaks it down.

What Is a Sole Trader?

A sole trader is the simplest business structure. You run the business as an individual, keeping all profits after tax but also taking full responsibility for any debts or liabilities.

You’ll:

  • Register with HMRC for Self-Assessment
  • Pay Income Tax and Class 2 & Class 4 National Insurance on profits
  • Keep basic financial records

✅ Advantages:

  • Easy to set up and run
  • Minimal paperwork
  • Full control and privacy
  • All profits are yours

⚠️ Considerations:

  • You are personally liable for debts
  • Raising finance can be harder
  • Less perceived credibility with some clients or suppliers

What Is a Limited Company?

A limited company is a separate legal entity. This means your business finances are distinct from your personal finances.

You’ll:

  • Register with Companies House
  • File annual accounts and confirmation statements
  • Pay Corporation Tax on profits
  • Usually pay yourself through a mix of salary and dividends

✅ Advantages:

  • Limited liability – your personal assets are protected
  • Tax efficiency – potentially lower tax on profits
  • Easier to bring in partners or investors
  • Increased professional credibility

⚠️ Considerations:

  • More administration and reporting to HMRC & Companies House
  • Accounting is more complex
  • You must make company information publicly available

Comparing the Two at a Glance

Feature Sole Trader Limited Company
Setup Simple & fast Requires registration with Companies House
Liability Unlimited (personal risk) Limited to company assets
Tax Income Tax & NI Corporation Tax, Dividends & PAYE
Profit retention All profits yours Profits belong to the company
Privacy Full privacy Public record via Companies House
Costs Low setup cost Higher admin & accountancy costs

Which Structure Is Right for You?

If you’re just starting out, testing an idea or working alone, sole trader can be simpler and more flexible.

If you’re planning to grow, take on employees or want to separate your personal finances, a limited company may offer better long-term protection and tax benefits.

The best decision depends on your circumstances and it’s wise to get professional advice before registering.

Please also see:  https://www.gov.uk/set-up-business

💎 How An Accounting Gem Can Help

At An Accounting Gem, we help you make the right start. We’ll:

  • Advise on which structure best fits your goals
  • Handle company formation or HMRC registration
  • Set up efficient bookkeeping and payroll systems
  • Keep you compliant and tax-efficient from day one

Whether you’re a one-person venture or scaling a team, we’ll make sure your structure supports your success.

📞 Get in touch today to book your free initial meeting.

Please see another An Accounting Gem blog:  https://www.aag-accountants.co.uk/why-ipswich-is-a-great-place-to-start-a-small-business/

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Ipswich This Weekend (24–26 Oct): What’s On + How An Accounting Gem Can Help Next Week

Enjoy the local highlights, then start Monday fresh; our friendly team can sort your receipts, VAT and cash flow while you get back to business. 🎉🍂

Looking for plans in Ipswich this weekend? Here’s a simple, day-by-day round-up of what’s happening across town, followed by how An Accounting Gem can support you next week once you’ve had time to rest, relax and have fun.

Friday 24 October

  • Nick Mohammed is Mr. Swallow: Show Pony, Corn Exchange, 7:30pm.
  • SPILL Festival Friday highlights, including “SPILL vs Brighten the Corners” at St Stephen’s Church.
  • Behind Bars: Suffolk’s Criminal Past exhibition, The Hold, 10:00–16:30.

Saturday 25 October

  • Christchurch Park parkrun, 9:00am (free, all welcome).
  • Ipswich Market, Cornhill, 9:00–16:00 (local produce & street food).
  • Goldie Lookin Chain, Corn Exchange, 8:00pm.
  • Christchurch Mansion: Woolly’s Nighttime Trail (from Saturday).

Sunday 26 October

  • Christchurch Mansion: Relaxed Visits (calm museum time).
  • SPILL Festival closing moments across town.

Ready to reset for the week ahead?

After a proper switch-off, if your receipts, VAT or cash flow need a tidy-up next week, An Accounting Gem is here with practical and friendly support.  We’ll help you get organised so you can stay focused on what you do best.

Get in touch to book a quick chat for next week, let’s get you set for a smooth start to Monday.

Please see another An Accounting Gem blog:  https://www.aag-accountants.co.uk/why-ipswich-is-a-great-place-to-start-a-small-business/

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Why Ipswich Is a Great Place to Start a Small Business

If you’re thinking about starting a small business, Ipswich might just be the perfect place to do it. With its strong community spirit, lower operating costs and growing local economy, this Suffolk town offers an excellent balance of opportunity and quality of life.

Here’s why more entrepreneurs are choosing Ipswich to launch and grow their businesses.

  1. Affordable Business Costs

Compared with major UK cities, Ipswich offers lower start-up and running costs from rent and utilities to business rates.

Office and retail spaces are far more affordable than in London or Cambridge, meaning you can reinvest more into marketing, staff or technology to grow faster.

Many new founders also benefit from affordable coworking spaces, such as:

  • The Ipswich Waterfront Innovation Centre (IWIC) – great for tech and digital start-ups
  • University of Suffolk Business Hub – offering access to events, mentoring and collaboration
  • Local shared offices and flexible workspaces for freelancers and creatives
  1. Excellent Transport Links

Ipswich is brilliantly connected for both clients and suppliers.

  • By train: Just over an hour from London Liverpool Street
  • By road: Quick access to the A12 (London) and A14 (Cambridge/Felixstowe)
  • By sea: Close to the Port of Felixstowe, one of Europe’s busiest ports

This makes Ipswich an ideal base for small businesses that trade locally, nationally or even internationally.

  1. Growing Talent Pool

With the University of Suffolk right in town and a number of nearby colleges, Ipswich offers a steady stream of skilled graduates in business, IT, design and finance.

The town’s mix of experienced professionals and young talent means small businesses can find staff who are ambitious, adaptable and ready to grow with the business.

  1. Supportive Local Business Community

Ipswich has a thriving and welcoming business network. Organisations like:

  • Suffolk Chamber of Commerce
  • Ipswich Borough Council’s business support services
  • Business East and Menta (local enterprise agencies)

…all provide advice, networking events, grants and mentoring for small and growing firms.

There’s also a genuine sense of collaboration, local businesses often support one another through referrals, partnerships, and community events.

  1. Great Place to Live and Work

Beyond business, Ipswich is simply a fantastic place to live. It offers:

  • A lively arts and culture scene around the Waterfront
  • Green spaces like Christchurch Park and Holywells Park
  • Award-winning restaurants, independent cafes and boutique shops
  • Easy access to the Suffolk coast for weekend downtime

This quality of life helps attract and retain staff keeping business owners happy too!

💎 How An Accounting Gem Supports Local Entrepreneurs

At An Accounting Gem, we are proud to help Ipswich’s small business community thrive. Whether you’re just getting started or scaling up, we’ll help you:

  • Set up your business structure correctly
  • Register with HMRC and manage your accounts
  • Build a cash flow plan that supports growth
  • Stay compliant, efficient and financially confident

We’re based right here in Suffolk so we understand the local landscape, challenges and opportunities.

📞 Get in touch today to start your business journey the smart way.

Please see another An Accounting Gem blog: https://www.aag-accountants.co.uk/the-10-most-overlooked-tax-deductions-for-small-businesses-in-east-anglia/

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🌟 What’s On Around Ipswich This Weekend (Fri 17 – Sun 19 October 2025)

Looking for something active, musical or just plain fun? Ipswich and nearby towns are buzzing with great events this weekend.

Friday 17 October

  • 🔥 Firewalk 2025 – Ipswich YM Rugby Club
    A thrilling charity challenge for the brave-hearted.
  • 🎤 Kevin Bloody Wilson – The DILLIGAF Guy (Live) – Ipswich Regent / Corn Exchange
    A night of outrageous Aussie comedy.
  • 🏉 St Joseph’s College 39th Rugby Festival (17 – 19 Oct) – St Joseph’s College, Ipswich
    A showcase of young rugby talent across the weekend.

Saturday 18 October

  • 🏃 Christchurch Park parkrun, 9:00 AM – Christchurch Park
    Free 5 km run or walk, all pacing levels welcome.
  • 🎺 The Beat Goes On – Essentially Swing & Suffolk Constabulary Male Voice Choir – St Peter’s by the Waterfront, College Street, Ipswich
    An evening of big-band and choral favourites.
  • 🏍️ Weekend Rideout – Waterfront Diner → Orwell Motorcycles → Felixstowe Pier
    Cruise along the Suffolk coast with local bikers.
  • 🎶 Suffolk Singers – Fall into Harmony – St Michael’s Church, Framlingham (IP13)
    Stunning vocals in a beautiful setting.

Sunday 19 October

  • 🧒 Ipswich Junior parkrun, 9:00 AM – Christchurch Park
    A free 2 km run for children aged 4 – 14.
  • 🎼 Music at Rushmere – St Andrew’s Church Hall, Rushmere St Andrew
    Relax with local musicians and friendly community vibes.

💎 How An Accounting Gem Can Support You Next Week

After a weekend packed with fun and fresh air, Monday doesn’t need to feel like a crash-landing.
At An Accounting Gem, we help local businesses and professionals start the week with clarity and confidence:

  • Smooth cash-flow planning to keep momentum going
  • Quick bookkeeping catch-ups so you stay organised
  • Insightful cost reviews to find hidden savings

Let’s make your numbers shine as brightly as your weekend.
📞 Contact us to book your Monday slot and start the week right.

Please see another An Accounting Gem blog:  https://www.aag-accountants.co.uk/the-10-most-overlooked-tax-deductions-for-small-businesses-in-east-anglia/

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The 10 Most Overlooked Tax Deductions for Small Businesses in East Anglia

Running a small business in Suffolk, Norfolk or the wider East Anglia region means every pound you legitimately save on tax is worth its weight in gold. Many business owners, especially sole traders or small limited companies, miss out on deductions simply because they do not know they exist. Below are ten often-overlooked deductions, fully anchored in HMRC guidance that can reduce your taxable profit. Use them carefully, keep proper records and always check that each cost meets HMRC’s strict “wholly and exclusively” test.

  1. Pre-trading expenses (costs incurred before you formally start)

If you incur costs to prepare your business before it officially trades, you may still be able to claim them as if they were incurred on day one of trading provided they satisfy certain conditions. Companies and sole traders can both use this relief. The expense must have been incurred within the past seven years, must not already be deductible, must be wholly for business and would have been allowable had you been trading.

For example, design work, marketing research or website setup paid six months before launch might qualify. Be cautious: costs like advance rent or stock purchases are often excluded.

  1. Use of home (office) costs apportionment

If you run your business from home, many owners forget to claim a share of household costs.

If you work from home 25 hours or more a month, you can claim a fixed monthly amount, HMRC flat rates for hours worked are:

  • £10 for 25–50 hours
  • £18 for 51–100 hours
  • £26 for 101 hours or more

This flat rate covers general running costs such as heating, lighting, electricity. You can still claim the business portion of phone and broadband bills separately.

If you prefer more accuracy, you can base your claim on a reasonable split of your actual household bills. HMRC doesn’t set a specific percentage, but your calculation should reflect:

  • Area – the proportion of your home used for business
  • Time – how long you use it for work
  • Usage – how much of the utilities or services are business-related

For example, if your workspace makes up 5% of your home, you might claim 5% of relevant bills. Whatever method you use, keep clear records or calculations showing how you arrived at your figures.

  1. Subscriptions and professional memberships

Small businesses often neglect to claim subscriptions to trade bodies, professional institutes, journals or industry associations if they are relevant to the business. The cost must be “wholly and exclusively” for the trade.

If the membership also provides non-business benefits (say, leisure), you must apportion accordingly.

HMRC has a list of the allowable professional bodies that they deem allowable as a business expense.

  1. Training tied to your business

Training that helps you maintain or improve skills directly relevant to your current trade is allowable. Courses to enter a wholly new trade are unlikely to qualify.

For example, a graphic designer learning a new software version may claim it; a designer retraining as a plumber would not.

  1. Repairs and maintenance of business assets

Many assume that any repair is disallowed, but repairs and maintenance to keep equipment operating are allowable (as revenue expenditure). This can include servicing machinery, replacing worn parts or repainting premises.

Just remember: upgrades or improvements to extend life may be capital in nature and thus dealt with via capital allowances, not expense.

  1. Bad debts (irrecoverable invoices)

If you have tried to collect from a client and failed, the cost of writing off the debt may be deductible. Many small firms forget this, leaving unpaid invoices that could otherwise reduce profits.

  1. Interest and bank charges on business finance

Interest on loans, overdrafts and other finance arrangements (so long as they are used wholly for business) can often be deducted. Also included are bank fees, charges and account keeping fees.

  1. Capital allowances on equipment / plant & machinery

Many small businesses under-claim capital expenditure. Rather than treating the full cost as a simple expense, you can typically claim it via capital allowances.

Significantly, the Annual Investment Allowance (AIA) allows you to deduct 100% of qualifying expenditure on plant and machinery (excluding most cars) up to a limit. From 1 April 2023 onwards, the AIA limit is permanently set at £1,000,000.

If expenditure exceeds the AIA threshold, you may use writing down allowances on the balance.

  1. Annual staff event cost (for limited companies)

A lesser-known relief: a limited company can host one event per year for staff (or all staff) and treat up to £150 per head as a deductible cost provided it is broadly open to all employees. Exceeding this limit may render the whole cost taxable.

  1. Use of motor vehicles – mileage allowances and simplified method

Transport and travel is a common area of oversight. If you use a vehicle for business journeys, you can claim allowable costs for fuel, insurance, repairs, servicing and other motoring costs, apportioned to business use.

However, journeys between home and your usual workplace (commuting) are disallowed.

As an alternative to calculating actual costs, HMRC offers a simplified mileage allowance:

  • 45p per mile for the first 10,000 business miles
  • 25p per mile thereafter
    (If you choose this, you cannot also claim detailed vehicle costs).

Many small businesses fail to match up journeys properly (e.g. between multiple sites) and lose out.

Making the most of your deductions

Each deduction above only works if you satisfy HMRC’s tests: the cost must be wholly and exclusively for the business, properly recorded, and only claimed for the business proportion where mixed use exists.

Begin by reviewing your expense categories: are there items you neglected or hesitated to claim? Then check whether they meet HMRC’s standards. Use appropriate apportionment methods (rooms, time, mileage) rather than blanket 100 % claims.

Particularly in East Anglia, where rural premises, home offices or regional travel are common, such deductions can make a noticeable difference to cash flow. But always keep full supporting evidence (invoices, mileage logs, contracts). HMRC may require proof for up to six years.

If you run a limited company and are unsure whether to classify a cost as an expense or capital allowance, or how to treat staff events or bad debt claims, discuss with a qualified accountant. Done carefully, these often-overlooked deductions can turn “missed opportunities” into legitimate savings.

Please see another An Accounting Gem blog: https://www.aag-accountants.co.uk/five-smart-ways-haulage-companies-can-cut-their-tax-bill/

 

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