Keeping costs low and your running your business tax efficiently means you can maximise your business profits. More business profits, means more money to reinvest in your business to grow and/or extract and use as you wish. Here a few key tips to help you work tax efficiently as a small business owner.

Make Pension Contributions

Making pension contributions is a very valuable way to help reduce how much tax you pay as sole trader and a limited company director, whilst also saving for your retirement. You can save up to £40,000 a tax year tax free from profits of your business.

Delay Dividend Declaration

Another very valuable tax saving strategy, one that many do not know about, is legitimately being able to delay when declaring dividends or profit extraction from your company.
By delaying when you declare a dividend, you can ensure you do not get pushed up into the higher rate of tax, which means more of your heard earned profits in your pocket versus HMRC.
Learn more about how to work with dividends in your business tax efficiently **here.**

Claim on Investment Goods

Businesses are allowed to claim capital allowance or 100% tax relief on plant and machinery such as:

Vehicles used for business
Costs for demolishing plant and machinery
Changes in the business to install plant and machinery
Fixtures such as bathroom suites and fitted kitchen
Parts of the building that are ‘integral features’, including escalators, lifts, heating systems, air cooling systems, hot and cold-water systems, electrical systems, and solar shading

You can deduct the cost of plant and machinery from your taxable profits, which means if you invest in a piece of plant and machinery to develop your business, the cost of the item will also reduce your corporation tax bill at 19%. It’s a win, win!

Bonuses Paid to Staff

Paying bonuses to your staff can help reduce your tax bills.
Staff bonuses should be paid before the end of the tax year to take advantage of the corporation tax savings.
For your staff, the bonuses will go through payroll like salaries, and will be charged with National Insurance and income tax.

We are small business tax specialists

These tax tips are just some basic tax-saving strategies for small businesses. Hiring an experienced accountant for small limited companies will open up many more strategies to save on taxes that are tailored to your specific needs.

Get in touch for a your free 30 minutes complimentary consultation to see how we can help you save on your business taxes.

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