Companies want to pay the right tax and stay on good terms with HMRC, but they ideally do not want to pay more than they should. Well, if you own a business, you are in luck as we are going to share a few ways to lower your tax and stay on the right side of HMRC.
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Start By Claiming all Available Expenses
Failing to do this is just like shooting yourself in both feet. The first is for missing out on the tax relief gained from the claimed expense and the second is for having to pay extra on your business tax for that taxed expense.
For instance, if you have a £500 printer and claim it as an expense, you might see a £50 relief, which means you will just have to pay tax on the remaining £450. However, if you fail to claim it as an expense, you will have to pay tax on the full £500.
You can also save on the VAT on it, get VAT consulting to help with this. The best thing to do is to keep a close eye on your expenses via excellent bookkeeping. You can have a specialist for this who can ensure that everything is recorded during purchase.
Pay the HMRC Early enough and Get Interest Back
HM Revenue and Customs like to promote early payments, so much that if you settle your projected business tax early and fail to make as much, they will repay the extra amount with added interest.
Keep in mind that over-the-top payments will raise suspicion. So, keep the taxes within reasonable projections and you'll get a chance for tax reduction through interest. This is a clever way to save on tax.
Defer your Invoices
If tax year is coming to a close and you have been quite successful and do not expect as much growth, you may want to consider delaying sales until after the end of the tax year on projects that are due that period. This way, you will be charged for it the following year, when your company will potentially have lower earnings, and thus less tax to settle.
Properly Record the Travel Expenses
These are expenses that tend to confuse a lot of business owners. With many ways to claim and many things you can or cannot claim on, it usually results in cases where some tax relief is not used.
So, understand the rules of travel expenses and ensure that your employees comprehend them as well. With this knowledge, you will be able to claim the right amount and reduce your tax in an acceptable and fair manner.
Buy the Equipment that Your Require Now
Currently, the government provides £200,000 in tax-free corporate investment ventures, as part of its yearly investment allowance. This ideally applies to all plant and machinery expenses, which are simply investments in business improvements, anything from cars to office buildings. You can take a look at the list of claimable items here.
This is an excellent way of claiming on investment equipment. That's because unlike the normal claims where you just get a percentage relief, you get 100 percent tax relief on items bought under annual investment allowance.
For instance, if you have made £1M taxable income through your company and invest £200K in offices, cars and other items, you will only be taxed £700K. This is an excellent way of saving on tax and growing your business as well.
These tips will ultimately save you a lot on corporation tax.