Tax planning 

The top rate of personal income tax in the UK is currently 45%, so finding the most tax-efficient way of take profits from your business can make a big difference to how much tax you will pay. 
Here are some of the things that you can consider: 

Business structure 

Deciding whether your business should be a limited company, a limited liability partnership (LLP), a partnership, or whether you should operate as a sole trader will make a difference to your tax position. As your business grows it can be beneficial to change, so regular reviews are a good idea. 

Research and development 

You can claim an additional 125% on qualifying research and development (R&D) costs for projects that lead to advances in science or technology. The definition is quite wide, and you could be eligible for enhanced tax deductions. 

Family tax planning 

Family-owned businesses can be structured to maximise the tax relief available. This is also an important point if you’re planning to hand over the business to the next generation or are thinking of selling to the management team. 

Business Property Relief (BPR) 

Sole traders, partners or shareholders in private companies can use BPR to reduce or remove the value of a business from inheritance tax, either as lifetime gifts or when they die. 

Entrepreneurs’ relief 

When selling shares of all or part of a business, gains made on qualifying business assets can have a much lower effective tax rate, subject to certain conditions. 

Loss relief 

If you have business losses, you should take advice about how to claim them in the most efficient way. For example, they can be offset against your previous year’s profits, or next year’s profits. 

Profits and cash extraction 

For directors and shareholders there are several options, including taking dividends instead of salary, company contributions to a pension and receiving tax efficient benefits. 
Planning when to take dividends and allocate expenses can also help you to run your business and manage your tax obligations. 
Staff incentives – Share options for employees such as Enterprise Management Incentives (EMI) can be very tax-efficient and are a good incentive for your key employees. 

Pension contributions 

Pension contributions are tax efficient for employers, employees and directors. Up to certain limits, corporation tax relief applies to company contributions to an employee’s pension, which will also be free of income tax and national insurance (NI). 
Individuals can also claim relief from income tax and national insurance for contributions to personal pension schemes. 

Capital allowances 

You can claim capital allowances when you buy tools to use in your business, company vehicles, equipment and machinery, for example. You can deduct some or all of the cost of these items from your profits before paying tax. You can invest up to £200,000 in capital assets and offset these against your tax bill, known as the Annual Investment Allowance (AIA). 
Sole traders can claim a capital allowance as part of their tax return. 
Partners can claim through a partnership tax return and limited companies can use a company tax return. 

Patent Box 

If your company holds a patent, the Patent Box scheme allows you to significantly reduce your taxes. Tax on profits from qualifying patents can be as low as 10%. 
Contact us if you would like to know more about steps you can take to reduce your tax obligations. 


"Lucie is currently helping me with all my bookkeeping, and in the last 6 months has been absolutely brilliant in completely organising my finances which i was struggling with. She has set me up for VAT, PAYE, CIS and dealt with HMRC. I now feel more confident with moving forward with my business. Lucie has taken a weight off my shoulders and I can now concentrate on my business. I would highly recommend to others, Lucie is very friendly and easy to get on with." 
Ed Harper - Bathrooms By Harpers Ltd 
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