Spearheading a business comes with a myriad of costly responsibilities, and while some choose to be grateful for their good fortune and pay the tax that they owe, it shouldn’t stop them from exploring how to reduce their tax bill.
Corporation tax liabilities often come with a hefty price tag, so for companies to reduce their tax bill, they need to look at every possible avenue. This will also give them an opportunity to consider how their corporation tax planning can help them to optimize their profits, and their tax bill is just a part of this.
Exploring Ways to Reduce Corporate Tax Bill in the UK
Tip #1: Claim an Exemption
There are a number of corporate tax exemptions available to companies. For example, companies that are incorporated in the UK can apply for a research and development (R&D) tax credit, which is a tax allowance that can reach as much as £25,000 for every £100,000 spent on developing innovative ideas.
In order to receive this allowance, companies need to meet a set of criteria, which are determined by the government. If a company meets these criteria, then it will be eligible to receive a credit from the government, which will then reduce the company’s tax bill.
Tip #2: Make Pension Contributions
As a company, you can receive tax relief if you make regular pension contributions during the tax year. The number of pension contributions you can receive will depend on the amount that you choose to contribute to your pension scheme.
Tip #3: Claim Training Costs
Training costs can often be overlooked, as many companies do not think of this as a tax deduction. If an employee is gaining new skills and training, and this will benefit the company, then companies can receive a tax deduction for this.
Tip #4: Claim Business Losses Relief
Claiming business loss relief is a good way to reduce your tax bill, and it is something that the majority of employees overlook. If you have incurred considerable amounts of business losses over a period of time, then you can claim these losses as tax relief.
Tip #5: Explore Share Schemes
Share schemes are another way to reduce your corporation tax bill, as more shares will equal more tax relief. Many companies do not realize that they can reduce their tax bill by increasing their shareholding, so you should definitely consider exploring this avenue.
The Bottom Line: Knowing Different Money-Saving Strategies to Lower Your Corporation Tax Bill
Corporation tax can be a costly occurrence for any business, so if you want to reduce the amount of corporation tax you have to pay, then you need to explore every possible option that you have in front of you.
There are a number of exemptions, allowances, and deductions that you can take advantage of, and knowing about these can help you to save time, effort, and money.
The key is to embrace these opportunities, and not just look at how corporation tax can affect you, but how you can save money in the long run. Just remember that you need to be able to meet the criteria, or fulfil the requirements in order to receive a tax exemption, allowance, or deduction.
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