Every business has to pay its taxes on time. It is a mandatory expense for the business that has to be incurred every year. With this regular expense, businesses keep on finding ways to reduce their taxes.
You can reduce your taxes by following all the rules of taxpaying. If the companies are adhering to the rules of taxpaying, they can get their taxes reduced.
The mandatory tax
Every business has to be a taxpayer and be regular in their tax payments. Any missed payments can lead to consequences. You cannot avoid paying taxes, but you can find ways to reduce your corporation tax.
You should have the right understanding of the tax system and also sufficient time to plan your finances efficiently.
With the passing times, the corporation tax is decreasing and is appealing to many businesses. Despite the decreasing tax, you still can find more ways to reduce your taxes and save a significant amount of money in your business.
Many businesses fail to claim their expense and face huge taxes. They have to borrow payday loans for bad credit from direct lenders to pay off these huge taxes.
If they borrow loans, it can come as a burden on the business and increase unnecessary expenses for the business. It is good to follow the right rules to reduce your taxes to reduce your unnecessary business expenses.
Ways to reduce tax
Claim all your business expenses regardless of the size
Irrespective of the size of your expense, small or big, you should claim all the amounts. There may be many small expenses in a business, such as a taxi fare, lunch expense, and many more, but you have to keep a record of all the expenses.
Although it can be a tedious task to maintain the record of every expense, this is an essential step for your tax saving.
These expenses may seem smaller but adding up these small expenses can lead to a huge amount that can be claimed to save your tax money. This can be a significant amount for your business; hence, maintain the record for the very expense that you make.
If you do not claim all your expenses, you are moving towards wasting your money. You can use many online accounting programs to keep a record of your expenses and claim this money towards the end. The online accounting process will simplify the process for you.
Every company has a different business expense, and their record-keeping for the expense can be different too. It is important to understand the expense for your business. A cost that is small for you may be a huge cost for other businesses.
Remember that whatever you include in your business costs should be completely business-related and not personal use.
Do not forget to claim your car mileage
One expense that your business can miss is your car mileage expense. Since it is not considered an expense, it can be missed while claiming your expenses. HMRC has an official authorized mileage rate.
If your staff is using a car or as a business owner you are using the business car, you can claim this expense to be on a tax-efficient side.
According to the HMRC, the authorized rate for your car mileage is 45p per mile for up to 10,000 miles. Beyond 10,000 miles, the rate is 25p.
Use your business phone
You can make use of your business phone instead of your personal phone. You can also tell your staff to make use of the business phone. If you make use of your business phone, you get a tax deduction on it. It includes the phone cost, call rentals and other costs.
Give a Christmas party to your employees
You may find it a weird way to host a Christmas party for your employees, but it is a good way to save your tax. There are certain guidelines for this party that you have to follow.
If the per head expenditure is less than £150, the business can consider claiming a tax deduction.
Pay salary to the directors
Salary is classified as a business expense, and the best way is to give the directors and owners a salary as it will be counted as an expense. The right way is to pay the directors the right mix of salary and dividends.
There are many other contributors involved in this, such as National insurance contributions, Income tax etc. You must be vigilant while planning the salary and expenses.
Consider your tax relief for R&D
Your business may be making innovations in its product and services. However, this can be missed out for government tax relief for innovation.
Your product and service innovation may be eligible for tax relief. If your business makes losses, you can claim that loss too for a tax credit and it will be paid in cash.
Employee share scheme
It is beneficial for you to offer shares to your employees. This will help you with a tax deduction.
This will give you a dual benefit of a tax deduction and also will increase staff retention. You can look for advice on how to make the best use of such schemes. If you choose the best scheme, it will be beneficial for your business.
Be creative and get a tax relief
If your business is working in a creative industry, you can gain benefits from your tax.
Various schemes are applied to this creative industry. These schemes vary in their rules, and you can seek professional advice to choose the best scheme for your business.
Following these steps can make your business save corporation tax. You can seek professional help from accountants and other professionals to guide you through the ways to claim your expenses and get a tax deduction.
With the right guidance, you will get the right claim that your business is entitled to.