Don’t miss out on the best ways to reduce your corporation tax bill
Many companies are constantly looking for new ways to reduce their cooperation tax bill in order to save money that can be used for business growth and other business activities. Whilst it is important to always follow HMRC rules and guidelines to keep you out of trouble you also don’t want to end up overpaying your bill and lose out on money that can be used elsewhere. Surprisingly, it is very common for businesses to miss out on some easy ways to reduce corporation tax and this guide will outline a few things you can do to increase your company’s profits.
Claim back every expense possible
Company owners often fail to claim for all the business expenses they are entitled to from HMRC throughout a tax year. Although it can be a time-consuming and tedious process to claim every penny back that could be seen as business-related costs, it is very worthwhile and all the little expenses certainly add up. Especially if you are an SME or start-up every penny you fail to claim back could be put to good use on another aspect of your business. There are no set rules in place to what you can and can’t claim. This is because it will vary from business to business but don’t forget to always make sure you only claim for things that are needed for business use.
Claim for R&D Tax Credits
Another great way to get corporation tax relief is to claim for R&D tax credits. Many business owners from a range of sectors miss out on this lucrative scheme as they assume they are not eligible. To qualify, you need to have expenditure in a project that has helped to resolve scientific or technological uncertainties. This may sound like it doesn’t apply to your business although, if you have spent money developing or enhancing a product or service, chances are you will qualify. If your company is eligible then you will be able to claim up to 33% of your qualifying R&D expenditure, which is a significant amount that can be used to grow your business. This is available either as a cash payment from HMRC or a tax deduction. Claiming for R&D tax relief is a time-consuming process which is why leaving it to R&D experts like Veritas Noble can save your business time and money as we can maximise your claim whilst you take care of other aspects of your business.
Pay HMRC Early
Paying your corporation tax early can actually give your limited company tax-saving benefits as HMRC rewards you for staying on top of your finances. This is in the form of interest with the earliest date they will start paying interest from being 6 months and 13 days after your accounting period ends. This is something you should definitely be doing if you are financially able to. If you don’t have the money to do this then make sure you at least pay your bill on time so you don’t have to pay more interest for paying late.
Use a Company Phone
Using a company phone can also help you reduce your income tax bill as all phone expenses that occur from your employees can be deducted. The only rule is the phone has to be owned by the company and not the employee. This is one of the best ways to reduce corporation tax bills especially as more and more people will be working from home in the future.
Claim Car Mileage Back
Another great way to reduce corporation tax is to claim your mileage back. HMRC currently lets you claim back 45p per mile for up to 10,000 miles in a tax year and 25p a mile after that. You can’t claim back fuel when travelling to and from work but make sure you don’t forget to claim all your other trips, it can really add up!
Pay Yourself a Salary
Paying yourself and other business directors a salary is a good way to reduce your corporation tax as salaries are genuine business expenses and therefore, are deductible from your corporation tax bill.
Claiming for R&D tax credits is often the best way for companies to reduce their corporation tax bill by a significant amount. Businesses from a range of sectors can be eligible for this scheme including businesses in the waste, construction, engineering and tech sectors. If you would like to find out more about R&D tax credits, or if you would like to talk to an expert and book a free no-obligation call to find out if your company is eligible then contact Veritas Noble today.