9 things you need to know about business tax planning

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Fortunately, there are some very effective ways to lower your corporation tax bill, from hiring a trained and qualified accountant to claiming specific rebates and exemptions. This article tells you how you can plan to pay your corporation tax bill and reduce it significantly.

1. Hire an accountant

Of all the suggestions on this list, hiring an accountant is definitely the best. The reason for this is that a professional and specialized accountant will be able to calculate the expenses that may be exempt from your final tax bill, as well as claim other reductions to which you may be entitled. Unless you are a qualified accountant, you will not be able to apply for these things under any circumstances. Moreover, according to the accountants of Suretax, taxes in the UK change frequently. An accountant will stay ahead of any changes, ensuring your tax bill is as low as possible.

2. Patent Box Lightening

If your business makes profits from patented inventions, you may be able to claim patent tax relief and pay a 10% corporate tax rate on those profits. You can also apply for an R&D tax reduction. Chances are you’ve never heard of either of these things, which further shows that you need a qualified accountant to handle your business tax returns for you. There are a myriad of HMRC exemptions that you could potentially qualify for, but without professional help you won’t be able to achieve them.

3. Deadlines

Remember that just because you didn’t claim tax relief for an expense last year doesn’t mean you can’t claim it anymore. You have up to two years from the end of an accounting period to claim certain tax breaks, including R&D tax breaks, patent box relief, and capital cost allowances. It’s definitely worth doing your research and seeing whether or not you qualified for any of these exemptions in your last tax year. You may be able to reduce your corporation tax for this year, by claiming last year and getting a refund.

4. Machinery

Each year, HMRC allows businesses to benefit from their annual investment allowance, which allows businesses to claim tax relief on purchases of commercial assets up to a specific limit. The annual investment allowance limit was increased to £1 million on 1 January 2019. If your business is eligible, you will be able to write off a significant amount of investment from your profits. Again, it’s likely that a qualified accountant or bookkeeper will be better able to determine what you can write off. It is always best to rely on the professionals.

5. Capital allowances on the property

You can claim a 2% allowance on new commercial construction expenses, provided the claim was made after October 29, 2018. This increased to 3% for claims made after April 2020. It is also important to Thoroughly study the expenses incurred so that you can determine if they are eligible for other depreciation deductions. The claim does not have to be made when the costs have been incurred. Instead, claims can be made going back many years, sometimes longer. It is important to speak to a professional in order to receive his advice and guidance.

6. Professional expenses

You must never forget that you have the right to claim reimbursement of your professional expenses. Business owners regularly incur expenses on behalf of their business but do not claim them when filing their tax return. This is something you need to get into the habit of as it can significantly reduce your tax bill. If you have expenses incurred for your business, such as taxis, meals, and gas, then you can claim them as business expenses. However, don’t try to exaggerate expenses or claim things that aren’t business expenses or you could get in trouble.

7. Pension contributions

As a general rule, companies can deduct from their profits pension contributions, paid to retirement plans on behalf of employees or directors. Payments must be made before the accounting close of the year and cannot take place several years later. This is a very effective way to reduce corporate tax. It also guarantees the constitution of a consequent pension which awaits you when you reach old age. Many people don’t think about their pension or retirementwhich often causes them to suffer later in life.

8. Work from home

When working from home, you can claim a certain amount of money for household expenses, such as heating, lighting and electricity (but only in your workspace). You may also be able to claim money for increased internet charges, insurance, and phone calls. Again, all of this can be discussed and researched by a qualified accountant, who will be able to determine whether or not you are eligible to claim reimbursement for your household expenses. Many people have been work from home due to the pandemic, so definitely worth considering if you’re stuck at home.

9. Loss Relief

Make sure your business claims all loss compensation that is available to it. Businesses can incur many types of losses, some of which can be claimed on your tax return. It is also possible to claim losses from a previous year in certain circumstances.

Finally, you can also consider organizing a staff party. You can throw a staff party every year, with up to £150 per person, fully tax deductible. It’s a very effective way to reward your staff while saving money on your tax return.

Taxes are not cheaper. With inflation on the rise, tax hikes are expected in the coming fiscal year. It’s important to discuss your options with a professional accountant, who will be able to strategize and tailor a plan to your business.

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