Business Corporation Tax Planning
Nobody likes paying more business corporation tax than they have to. Tax can be one of the biggest costs for a business and should, therefore, be treated as an integral part of any business planning.
We believe that a business corporation tax strategy must be both innovative and effective in creating value, whilst enabling you to plan ahead. Tax strategy must also be underpinned by fast access to accurate and relevant information delivered by the necessary human skills.
By reviewing the tax structure and tax environment of a business or individual we can advise on a course of action to improve tax positions for corporate, personal and family tax affairs.
Our experience and in-depth knowledge enable us to identify areas which could potentially save you tax and with the ever-increasing complexity of tax legislations, it pays to put your tax planning in safe hands.
Our corporate tax team will:
- Find the most tax-efficient way forward for your business
- Advise on corporate tax opportunities and reliefs
- Focus on minimising tax liabilities and maximising wealth
- Help businesses to plan for the future
We aim to do this by holding productive pre-year end meetings with our clients.
At the most basic level, there are several simple planning actions you can take to start saving tax, yet we still come across businesses that are not aware of these easy to implement procedures.
Claim All Business Expenses
Ensure you claim all available business expenses. Keep all receipts and invoices, and record your business’s expenses on a daily, weekly or monthly basis.
If you forget to claim one or more large business expenses, you’ll be paying more corporation tax than you need to. Some business expenses that business owners sometimes forget to claim for include:
- use of home as an office (if applicable),
- parking fees,
- Mileage expenses, 45p up to 10,000 miles, 25p thereafter,
- subscriptions to professional associations,
- manuals and reference books used by your business,
- staff events, such as Christmas parties (up to a certain limit),
- Eye tests and prescription glasses where using screens is a specific part of the job,
- Mobile phone contract costs.
Annual Investment Allowance
A limited company can claim an annual investment allowance (AIA) of up to £1 million a year until December 31st 2020. The total cost of purchasing any of the following items for your business can be included in this allowance:
- Lorries, vans and trucks (but not cars)
- Computers, laptops and printers
- Machinery
- Some building fixtures, including bathroom suites and fitted kitchens
- Heating systems
- Fire alarms
- Lifts.
The total cost of these capital investments is deducted from your company’s taxable profit, so it makes sense to invest in plant and machinery as your business needs.
Where there is commercial property involved, new and existing structures, allowances can sometimes be lost or unclaimed.
Let’s look at an example, a care home has an extension. The costs of the beds and tables will be categorised in the accounts as “fixtures and fittings” but the toilets, lifts, plumbing, lights may all be included as “additions to property” or something similar. If the capital allowances claim only picks up the items categorised as fixtures and fittings which were added separately then allowances on the additions built into the building will be lost, this can sometimes be substantial.
Making such a claim involves a specialist with whom we’ll liaise and work with on your behalf, there are fees but in our experience, it may well be worth the investment.
Research & Development
R & D Relief, allows small and medium-sized businesses to deduct an extra 130% of qualifying expenditure, making a total deduction of 230% of the cost of qualifying R&D projects from their profits, or, if the company has made a loss, claim a tax credit of 14.5% of the surrenderable loss,.
R & D takes place when a project seeks to achieve an advance in overall knowledge or capability in a field of science or technology, there are rules and guidelines and we’ll work with you, firstly to assess suitability, then collate costs and information to prepare a report.
Pensions
An employer can contribute into a pension on behalf of an employee, including directors, up to the current annual allowance of £40,000, if this allowance hasn’t been used over a four year period then it is possible that contributions could be up to £160,000 in some cases, by making use of the carry-forward provisions, it’s important here to take professional independent advice from an Independent Financial Advisor.
At Stopfords we have long-standing trusted relationships with advisors with whom we will work with on your behalf.
Avoid Penalties and Interest on Late Filing and Payments
HMRC imposes penalties for the late filing of your Corporation Tax Return, starting at £100 if they are just one day late and rising to 20% of your estimated corporation tax bill one year after their due date. In addition, HMRC currently charges 3.25% interest on all overdue payments of corporation tax.
These penalties and interest payments can be entirely avoided by:
- keeping up to date with your bookkeeping, we have a dedicated bookkeeping team if you have problems with this, be it a time issue or software issue, our team are skilled and experienced with Sage, Quickbooks and Zero,
- sending all records to us in good time,
- helping us to ensure your accounts and tax return are submitted on or before the due date,
- paying corporation tax before the deadline.
