Corporation is currently 20%, by 2017 it will 19% and by 2020 it will be 18%, which is excellent news but you could do more to pay even less.
Here are my top 10 ways to pay less
Many businesses are still missing out on claiming for Research and Development Tax Credits.
Since 1 April 2015, the tax relief on allowable R&D costs for SME’s is 230% – that is, for each £100 of qualifying costs, your company or organisation could have the income on which Corporation Tax is paid reduced by an additional £130 on top of the £100 spent. It also includes a payable credit in some circumstances.
Pensions are now more flexible than ever.
Net Relevant Earnings rules don’t restrict employers from paying in the maximum per year of £40,000 and you can use Carry Forward to pay in even more.
You could use a SSAS or SIPP to help you buy Business Premises
Pension payments are an allowable business expense.
Annual Investment Allowance
Buying equipment, even if its on finance is a great way to reduce your corporation tax bill, the 100% AIA can be used on the date you buy the asset.
Currently the Annual Investment Allowance is £500,000 and this will reduce to £200,000 in January 2016.
Low Emission Cars attract 100% Capital Allowances and they are cheaper to run and tax!
Repay your Directors Loan Account
If you have an overdrawn Directors Loan Account at the end of your year and it isn’t repaid with 9 months that you will get an extra tax charge of 25% on the balance, you can only reclaim this when the Directors Loan has been repaid.
If you expect the next trading period to be a loss, why not extend your current period to 18 months and offset the 6 month loss against the 12 month profit?
You will have to pay the Corporation Tax on the first 12 months but sending in a 6 month return will enable you reclaim some of the tax back.
Claim Tax Free Benefits in Kind
There are many benefits which are tax free such as Childcare, Mobile Phones, Cycling, Business Mileage and many more, are you claiming as many as you can?
Inter Company Charges and Groups
Small businesses are exempt from Transfer Pricing Rules so they can charge each other fees.
A business is a ‘small’ enterprise if it has no more than 50 staff and either an annual turnover or balance sheet total of less than €10 million.
You might find it easier just to create a Group and claim Group Tax Relief
Accrue a Bonus
If you accrue a bonus you will have to pay it within 9 months of the end of the year, but it can help to reduce your corportion tax bill.
Have a home office and charge your company rent