As a business owner, you must find ways to increase profits and reduce costs. Taking the necessary steps to ensure your company stays on top of a competitive industry is crucial. However, it can be tricky to do these because you need to do taxes, including paying for corporation tax bills. Fortunately, there are legal ways to do this.
This article will discuss eight tips from tax accountants to help minimise your corporation tax costs.
1. Claim Training Costs
You can reduce your corporation costs by claiming costs from your training courses, which are essential in helping your employees develop crucial skills. If you want to claim tax relief from the HMRC, you must establish a clear relation on how the training can benefit your employees. If the training course only aims to develop new skills, it may not qualify as tax deductible.
2. Subscription Costs
Necessary professional subscriptions for your employees’ professional practice and business trade may also be allowable tax expenses. You can deduct it from your profit to reduce corporation tax liability. However, you must remember to register these paid subscriptions with the HMRC. Otherwise, your business can face fines and legal trouble.
3. Contribute to Pensions
As a business owner, you must find ways to be tax-efficient—and you can do that by requiring your employees to contribute to pensions. They give limited companies a break from taxes, which can help reduce taxable profits and liability in corporation tax.
Moreover, company directors can reduce the company’s tax while protecting their post-retirement period by paying pension through company profits instead of expenses from their pocket.
4. Pay Due Taxes Early
Besides protecting your company from late submission penalties and extra charges, paying your corporation taxes on time can boost your interest income. If you pay your corporation tax early, you will earn interest from HMRC.
The interest rate is 0.5%, and you can pay it from the date of prepayment until the deadline. The earliest you can receive interest is six months and 13 days after starting the business’s accounting period.
You may also hire a professional tax accountant to help minimise mistakes and pay ahead of the tax season.
5. Claim Business Mileage
Your tax accountant can help you claim travel costs as business expenses if you commute to the destination solely for business purposes, not for the mileage for daily commuting to your workplace.
Besides the business mileage, you can claim other costs for business expenses, such as toll taxes, train tickets, parking fees, public transport, and vehicle repairs. You may also get business mileage from congestion, hotel room charges, commodities, and office equipment.
6. Throw a Staff Christmas Party
You can also organise a Christmas and summer party for your employees to help reduce corporation tax bills. However, you must ensure that the event meets the HMRC’s conditions, such as hosting them annually and making them exclusive to staff or directors only. The individual payments must also not exceed £150, which includes the VAT.
7. Claim an Exception
You may also ask your tax accountant to claim a VAT exemption of up to £150 for every employee that brings a guest, as long as they’re the staff’s partner or relative.
8. Business Losses
You may also claim business losses as a relief for your corporation tax liability if the company suffers losses of assets, property income, or trading losses. Your company must also be liable for paying corporation tax.
Being a successful business owner means learning to reduce costs and increase profits. Maximising tax reduction tips and consulting a tax accountant can help you become a financially efficient company.
If you need a tax accountant in Bolton, we can help. YRF Accountants Ltd. is an accounting firm ready to help businesses with their tax and accounting needs. Contact us now, and let’s help you make the right choices for your company!