When you pay the tax for your business you might not necessarily be aware that you have paid more than you needed to. There are a number of allowances and tax-deductible items which can help you to avoid paying an excessive amount. Not understanding or being aware of the ways to save money can cause you to potentially overpay on your tax which could lead to a tax rebate at a later date.

But what should your business do with a lump sum that you had potentially resigned to going to HMRC?

Assessing your tax rebate

If you’ve worked with a tax specialist such as Brian Alfred to get your rebate finalised you might know what you should stand to receive in payment and when. Otherwise it is a case of waiting for HMRC to get back to you with a figure.

It might be that the sum isn’t that large, limiting your options, or it might be that the sum acts as a significant cash injection for your business.

Making that assessment can help you to work out what your next steps as a business should be.

Saving

Paying too much in tax can cause businesses to potentially run into financial difficulties. For small businesses and sole traders, a tax rebate can be a considerable cash injection.

In some situations, it might be worth saving that money, either to help secure and shore up a business’s finances or as part of a long-term plan for your business where you will need to spend and invest further down the line. Either to fuel expansion or to perhaps provide a new service to your customers.

Reinvesting

Your tax rebate might allow you to speed up the expansion of your business. A sudden cash injection, reinvested back into a business, can help in a range of areas, including:

Training – a tax rebate could pay for courses, qualifications and other means to improve the skill levels of staff within your business, either to offer a better level of service to customers or as a part of adding new services to your business.

Services – adding new revenue streams to your business can take time and research to implement correctly. A cash injection brought about from a tax rebate could help your business to do this much sooner than you had initially planned.

Equipment – you may have equipment that you rely on within your day to day work that desperately needs upgrading or replacing. Tools, machinery or even your business vehicles could all benefit for investment, allowing you to work more safely, efficiently and economically.

Marketing – in order to attract more customers to your business and to help fuel future growth and expansion it might be worthwhile to invest your tax rebate into your marketing efforts. This could be anything from paid advertising on social media to enlisting a marketing agency with a larger marketing effort.

A tax rebate can be used in a variety of ways, either in one of the ways mentioned or potentially just as a way to shore up business finances during a quieter trading period.

The crucial thing to keep in mind is that money can be used for a range of different things, or it can be saved. Getting the right advice and guidance when it comes to your business finances can help ensure that you make the most use of the money you receive, promoting growth and stability within your business while helping to avoid potential future financial difficulties.