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Paying too much tax
How to minimise your business tax, legally!
Why should you pay more tax than you need to? In our experience, 75% of business owners like you pay more tax than you should, just because you don't get the right advice at the right time or didn't have the right tax planning in place.
Strategy to reduce your business tax bill will be different from our last client because your situation is different from them but here we can share some of the many ideas with you on how we will be able to minimise your business tax:-
Select correct structure for your business
There are 4 main ways by which you can do business, sole trader/partnership/limited company/limited liability partnership. The type of your business structure affects the type and amount of tax you pay. Appropriate structure for your business depends upon a number of factors and your attitude towards risk.
Create different categories of shares for your limited company
If you have different classes of shares in your company, it is possible you can give dividend to one class and not to other, or declare different dividends for different class of shares. This allows flexibility to extract profits in a tax-efficient manner.
Claim benefit for the business element of mixed purpose expenses
You may be using your home, car, computer or mobile phone for both business and private purposes. You must claim your business element of expenses in a fair and reasonable manner.
If you use your car or motor cycle for business, use mileage rates for claiming expenses
It is usually better to keep the ownership of your vehicle personal and claim business mileage using HMRC authorised mileage rates. Currently, mileage rate for cars and vans is 45p per mile for the first 10,000 business miles and 25p per mile thereafter. The mileage rate for motor cycles is 24p per mile. This also allows you to avoid keeping detailed records like fuel, insurance, repairs, road tax bills.
Claim home expenses, if you use it for running your business
You can claim a proportion of expenses like rent, mortgage interest, insurance, council tax and general repairs. The apportionment of expenses should be in a fair and reasonable way, such as on the basis of floor area or number of rooms.
Contribute to your personal pension plan
If your business makes a contribution into your personal pension plan, then it is a deductible business expense and you do not pay any tax on this benefit.
Timing your capital expenditure to fasten relief
Bringing forward your capital expenditure a few days before the year end date will allow you to take advantage of claiming AIA allowance relief forward by 12 months.
Employ your family members in your business
You can employ your spouse/partner and your children in your business and pay them a salary equal to their personal allowance. This will utilise their unused personal allowance and also reduce your business tax.
Pay yourself in the most tax efficient way
If you operate as a limited company, then paying yourself a small salary up to your personal allowance and the rest as dividends is normally the best way to minimise tax payment.
Avoid paying higher rate tax on dividends
You may save tax by delaying dividend withdrawl until a future tax year, if you have already reached the higher rate (or additional rate) threshold in the current year.
Use tax free benefits and expenses
Benefits such as mobile phones, childcare and childcare vouchers are tax deductible.
Make your family members additional shareholders in your company
You can benefit from using your family member's tax allowance by splitting shareholding with them. You can include your spouse/partner, children, siblings and your parents.
To find out, how we can minimise your business tax burden, why not contact us on 0208 914 8887 for a Free, No Obligation Consultation. Success of your business is our business.