The importance of proper tax planning

Tax planning is beneficial for businesses of all sizes. Whether you own a small company or a large-scale operation, it pays to invest in effective tax planning services and to take advantage of expert advice and assistance. Tax planning facilitates stress-free financial management and enables businesses to capitalise on tax incentives. 

What exactly is tax planning?

Tax planning is a means of taking control of your business finances to ascertain how much tax you owe and to take advantage of incentives or allowances that can reduce tax liabilities. All corporations, no matter how small or large, are required to pay taxes in line with regulations set out by HMRC. The amount of tax each business pays will depend largely on the amount of profit generated and the company’s tax liability. Tax planning can take various forms, including retirement, inheritance and business planning. 

Why is proper tax planning important?

There are two main benefits of proper tax planning. The first is being aware of how much tax you owe and the second is taking steps to minimise your tax liability. Tax bills can be a nightmare for small and medium-sized businesses when they come out of the blue, and they’re higher than anticipated. By investing in sophisticated services and hiring professionals, you can ensure that you’re fully aware of your responsibilities and you can prepare in advance. In addition to taking stock of your finances and eliminating the stress of paying tax, effective tax planning can also help to lower your tax bills. There are various allowances and opportunities that companies can make use of to alter tax liability. Experienced advisers will be able to discuss the options that are applicable to you. Without proper tax planning, you could be paying out a lot more than you need to. 

Options for SMEs

There are several tax incentives that are available to businesses based in the UK. Examples include capital allowances, capital gains roll-over relief and research and development tax credits. With capital allowances, you can write off the cost of certain assets against your taxable profits, while capital gains roll-over relief might allow you to delay paying capital gains tax if you sell assets or use the proceeds of a sale to buy new assets. Research and development tax credits, also known as R&D credits, are a really interesting proposition for SMEs. This grant incentivises businesses to fund investment in innovation, and it enables you to claim 130% additional expenses in addition to your regular 100% tax deduction. This means a staggering 230% tax relief on research and development spending. 

The benefits of hiring an expert

If you’re looking to reduce your tax bills, or you’re unsure about what kinds of incentives are relevant to your business, it’s hugely beneficial to seek expert advice. You could potentially save a fortune at the same time as eliminating any tax-induced stress. 

Proper tax planning can simplify and streamline the process of paying tax, as well as helping businesses to capitalise on tax incentives. If you’re not already taking steps to plan ahead for the next tax year, now is the time to call in the experts. 

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