Five Top Tax Reduction Tips For Your Business

Five Top Tax Reduction Tips For Your Business
Do you want your business to pay less tax this year?

Of course you do. It's a pretty silly question, right? No
company wants to pay more tax than they absolutely have to
- that's a given.

Nevertheless, many companies don't take advantage of the
opportunities that are available. Luckily, with some fairly
straightforward tax planning, you can significantly reduce
your corporate tax this year.

Here are our five top tips that will help reduce your
company's tax liability this year:

1) Bring Forward Long Put Off Expenditures :

Bring forward that long overdue office repair or
redecoration project or that direct marketing campaign you
were considering for next year. Any expenditure before the
company year end will reduce the current year's tax
liability and lets' face it, your office will look nicer.

2) Make The Most Of Your Capital Allowances :

You will certainly save your company some tax by bringing
capital expenditures - such as machinery - forward. Some of
the bigger savings can be found in the purchase of energy
saving technologies and products which qualify for a 100%
allowance.

Companies generally receive a 25% allowance on plant and
machinery related capital expenses, but SMEs companies get
a 40% allowance in their first year. So, if you are a small
or medium sized company (as defined by company law), take
advantage and make those types of purchases before the end
of your first year trading.

Even better, for computers and telephone equipment, you can
claim a 100% reduction against your profits in the first
year.

The best bet of all is in research and development - a new
R&D tax credit means you can claim 150% of what you spend,
and if you are a loss-making company you have the option of
taking a part of that as an immediate cash payment.

This is a little known and often misunderstood tax credit,
but many companies can take advantage of it. Get some
advice on what exactly qualifies as research and
development first, just to be on the safe side.

3) Re-structure Your Dividends and Bonuses:

Smaller companies - in particular, owner-managed
businesses, can save on National Insurance payments by
taking dividends rather than paying themselves a salary. On
average for a higher rate tax payer, the tax rate will be
reduced to around 39% compared to 47%.

4) Minimize Capital Gains Costs:

One of the best ways to minimize capital gains is to
reinvest the proceeds of a sale into buying a replacement
asset. Be warned, though, that not all assets qualify for
relief. Check first before utilizing this tip.

5) Get The Right Receipts

A useful tip is to make certain that your employees ask for
VAT receipts whenever they make a purchase on behalf of the
company. That will ensure you can claim back the VAT on all
purchases that are VAT rated.

If your company reviews it's tax affairs between two and
three months before the end of your financial year, then
you can start planning how to effectively and, most of all,
legally, minimize your tax liabilities.

----------------------------------------------------
Jim Haines works for Just Accountants, the UK website where
businesses can get quotes from up to 4 local accountants.
Visit http://www.justaccountants.co.uk for details.