Ways to scale back Corporation Tax
Now quite ever, companies are always trying to find ways to scale back their corporation tax liabilities, and that we frequently advise clients on ways to make sure they pay the smallest amount of tax possible. There are many basic strategies which will be taken because fairly often, people don't want to pay quite they have to. Cheap Accountants in London are here to help and guide you with all your corporation taxes
Here are our top 10 recommendations on the way to reduce tax:
1. Claim R&D tax relief
Is your business ensuring that it doesn't miss out on Government-backed tax reliefs for innovation? If your business pays technical staff to unravel technical problems, perhaps developing new or improved processes, products, or software, then it's likely that you simply might be reducing your corporation tax by around £25,000 for each £100,000 spent on innovating. Tax savings can also be available for Research and Development allowances (RDAs), where you’ve purchased research facilities or equipment. These reliefs are extremely generous, and our Radius team has an easy and proven record (100% success record with R&D tax relief applications submitted) in making these claims for our clients. to check your eligibility to say, why not download our eligibility checklist. 11 simple questions, and ten minutes of some time to work out whether you'll be eligible to say.
2. Are you able to claim Patent Box tax relief?
Does your business make profits derived from patented inventions? you'll look to say Patent Box tax relief and pay an efficient rate of 10% corporation tax on those profits.
3. Don’t miss deadlines
Companies normally have two years from the top of an accounting period to say certain tax reliefs, like R&D tax reliefs, capital allowances, and patent box relief. Companies should look to form sure they need to claim their full entitlement to those reliefs before it's too late.
4. Invest in plant & machinery
Companies can enjoy the “Annual Investment Allowance” (AIA) which allows a business to say immediate tax relief on purchases of certain business assets up to a specified limit. The AIA was increased to £1m on 1 January 2019, meaning businesses investing in qualifying items are ready to write off a big amount of the investment against their profits.
5. Capital allowances on Property
For buildings acquired before this, companies should review the expenditure incurred to work out whether any qualifies for capital allowances in its title. The claim doesn't need to be made when the prices were incurred, therefore, it's possible within the majority of situations to say missed allowances going back several years, often to when a property was originally acquired.
6. Don’t forget to say all business expenses
It may sound obvious, but don’t overlook any expenses from your accounting records. we frequently find Directors incur expenses themselves on behalf of the business but fail to say them back through the accounting records.
7. Directors' Salaries
Company owners should look to use their personal allowance effectively, by drawing a tax-efficient combination of salary and dividends from the business.
8. Pension contributions
Companies can normally obtain a deduction from their profits for pension contributions paid into pension schemes on behalf of employees or directors. Payments must be made before the top of the accounting period to get relief. this is often quite straightforward thanks to reducing Corporation Tax, although consideration should even be given to the individuals’ personal tax position before making contributions.
9. Claiming business mileage
If they use their personal car for business, any employee can claim expenses from the corporate on a tax-free basis, using statutory rates per mile of;
Up to 10,000 miles once a year at 45p
Above 10,000 miles at 25p
10. Work from home allowance
Where homeworking takes place, HMRC will allow you to say some of your home expenses to satisfy the extra costs of heating and lighting the work area. There may additionally be increased charges for internet access, insurance or telephone calls, etc. As a start line, a £4 per week payment from the employer is suitable
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