TAX SAVING TIPS

November 28, 2023

HERE'S 10 TAX SAVING TIPS FOR BUSINESS/NEW BUSINESS

Tax Tip 1: Capital Allowances – Can be claimed on a wide range of qualifying capital assets including plant and machinery, fixtures and fittings (known as integral features) and cars. A variety of allowances are currently available some of which give an immediate reduction in taxable profits of 100% of the allowable expenditure. Capital allowance claims should be maximised where possible claiming all available allowances and thinking carefully about the timing of expenditure. Professional advice should be sought to maximise the capital allowance position, particularly in the case of property sales, purchases, refurbishments and new developments.

Tax Tip 2: Profit Extraction – With the top rate of income tax currently at 45% for some types of income, it is important to think about the most tax efficient way of extracting profits from a limited company. For the director/shareholder there are several ways of doing this including taking dividends instead of salary, company contributions to a pension and receiving tax efficient benefits.

Tax Tip 3: Contributing to a Pension – Pension contributions are tax efficient for both employers and employees/directors. Company contributions to an employee‘s pension will attract corporation tax relief and will be free of income tax and national insurance for the employee (up to certain limits). Individuals can claim relief from income tax and national insurance for contributions to personal pension schemes (again, subject to certain limits).

Tax Tip 4: Entrepreneurs’ Relief – Can offer significant tax savings to individuals and certain trustees when selling shares or the whole or part of a business. Where a claim is made, gains on qualifying business assets suffer a very low effective tax rate of only 10%.

Tax Tip 5: Research & Development Relief Claims – Broadly speaking, your company or organisation can claim an additional 130% tax deduction on qualifying R&D costs if it undertook an R&D project that seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty. The definition of research and development is much wider than many people think. You could therefore be eligible for enhanced tax deduction and not realise it!

Tax Tip 6: Patent Box – The Patent Box regime present companies that are holding patents and using them in their business with the opportunity to significantly reduce their tax burden. Under the regime profits from qualifying patent interests are taxed at rates as low as 10%, delivering effective tax rate benefits. Companies should take action now to understand how to benefit from the regime and what business changes might be advantageous.

Tax Tip 7: Investors’ Relief – offers relief from capital gains (CGT) for individuals other than officers and employees. It applies to gains arising on disposals of shares in unlisted trading companies that were issued on or after 17 March 2016 and that have been held for at least three years from 6 April 2016. The relief applies an effective rate of CGT of 10% to qualifying gains falling within the cumulative lifetime limit of £10 million.

Tax Tip 8: Family Tax Planning – Structuring of a family owned business in a commercial yet tax efficient way can maximise the tax reliefs available. Tax should also be an important consideration in succession planning.

Tax Tip 9: Enterprise Management Incentive – The EMI is a share scheme designed to help small, ambitious companies retain the right talent. By rewarding staff you’re looking to recruit or retain with tax advantaged share options, you offer key employees an incentive to continue to work for you to develop and grow the company.

Tax Tip 10: Enterprise Investment Scheme – EIS is designed to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies. Subject to specific conditions being met, individuals are able to obtain income tax and capital gains tax reliefs on investments in companies that qualify for EIS.

TAX SAVING TIPS

HERE'S 10 TAX SAVING TIPS FOR BUSINESS/NEW BUSINESS

Leave a Reply Cancel reply

SITE MAP

SERVICES

CONTACT INFO