We at Pearl lemon Accountants often advise clients on corporate tax filing services,
liabilities, since companies are more concerned than ever about reducing their tax obligations. People rarely want to pay more than necessary, so there are many basic strategies that can be taken.
Our top 7 tips for reducing corporation tax are as follows:
1. Take advantage of R&D tax breaks
Make sure your business takes advantage of tax reliefs for innovative technology backed by the government.
In the case of a business that pays technical staff to develop new or improved processes, products, or software, you may be able to reduce your corporation tax by approximately £25,000 for each $100,000 you spend on innovation. You may also save on taxes when you pay for research facilities or equipment with Research and Development allowances (RDAs).
Using Radius’ team of consultants, you’ll be able to access these generous tax reliefs, and our Radius team has a track record of success in making these claims for clients (100% success rate in R&D tax relief claims).
2. Does the Patent Box qualify for tax relief?
Profits from patented inventions are important to your business? In some cases, patent box tax relief could be claimed and you would pay an effective corporate income tax rate of 10%.
3. Meet deadlines on time
For example, R&D tax relief, capital allowances and patent box relief are normally available two years after the end of an accounting period. It is essential that companies take action before it is too late to claim all the reliefs they are entitled to.
4. Purchase machinery and equipment
Companies may be able to utilize the “Annual Investment Allowance” (AIA), which allows businesses to immediately claim tax relief on certain assets purchased for business purposes. A significant amount of an investment in qualifying items may be written off against a business’ profits due to the increase in AIA on 1 January 2019.
5. Allowances for capital improvements
The straight line writing down allowance increases to 3% for expenditures beginning in April 2020 for companies that incur new commercial building expenditure after 29 October 2018.
The expenditure incurred for buildings acquired before this time should be reviewed to see if it can qualify for capital allowances in its own right.
It is possible to claim missed allowances past several years, which is often when the property was acquired, regardless of when the cost was incurred.
6. Always claim all expenses related to your business
Your accounting records should reflect all expenses, no matter how small. Director’s expenses are often incurred on behalf of the business, but they are not reclaimed by the accounting records.
7. Salary of directors
By combining their salary with dividends from the company, business owners can utilize their personal allowances in a tax-efficient way.
