All limited companies in the UK need to pay corporation tax on their profits. The rate for this tax was increased to 25% in April 2023. Now, as a business owner in Reading, if you are wondering how you can minimise it or whether there are methods to do so, this discussion can help. But for that, you will need to properly maintain your accounting records. To streamline the process, however, you should visit a certified chartered accountant.

Let us now delve into the ways to reduce your corporation tax on the following points:. Go through them, and if you have further queries, discuss them with your consultant or certified accountant.

• Claim the Deductions and Reliefs 

By claiming the deductions and reliefs, you can reduce the tax. But since various options are available, you should book an appointment with your tax consultant, who can guide you with the same.

Typically, the reliefs and deductions include:

• Capital Allowances: These can be claimed based on the cost of the assets that are used for various business purposes. You can claim these costs as a one-time payment or over several years, gradually.

• R&D Tax Relief: You can claim R&D tax relief if you run a business that deals with technology and science.

• Patent Box: You can get 10% relief on corporate tax if you have made profits from patented inventions.

• Venture Capital Schemes: You can claim tax relief through the Enterprise Investment Scheme (EIS) if you invest in scale-up companies. Besides, the Seed Enterprise Investment Scheme (SEIS) can get you even higher tax relief if you invest in riskier early-stage startups.

• Use the Right Business Structure

The corporation tax is impacted by business structure. So, make sure that you are using the right one. But if you are unsure of the category, discuss your requirements with a Chartered Certified Accountant in Reading. They will evaluate the business structure and properly categorise it.

In general, you will be taxed on your personal profits if you are a sole trader. On the other hand, if you operate through a limited company, you will be taxed on the profits distributed to you as a shareholder.

• Make Business Investments

To reduce your corporation’s tax liability, you should invest in your business. By doing so, you are reducing your profits, thus minimising your corporation tax bill.

You can invest in new equipment, train your employees, and expand your facility.

• Strategise Your Tax Planning

To reduce corporation tax, you can use various strategies. A tax consultant of tax can formulate them for you.

Generally, some of the common methods that you can take advantage of include transfer pricing, offsetting losses, and group relief.

• Professional Advice is Important

Finally, if you do want to minimise your corporation tax bills, you should discuss your requirements with a professional Reading Chartered Accountant with years of experience and expertise in this area.

To conclude, if you follow these 5 steps, you can effectively minimise the taxes and save costs.

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