Claiming Tax Relief on R&D

One of the most effective ways to reduce your corporation’s tax bill is by claiming tax relief on research and development (R&D). As the name may suggest, R&D tax relief is an incentive that is particularly designed to encourage various in-depth research and development of innovative ways and new technologies that may come in handy in the manufacture of improved products and the innovation of better services.

More investment in R&D and qualifying expenses for the same will help you claim more tax relief, thereby reducing your taxable profits. A professional tax accountant will give you further insight in this regard.

Paying a Lower Effective Rate with Your Patent Box

The Patent Box Scheme will lower your effective tax rate to merely 10% on the profits that you earn from your patented products, services, or processes. This tax incentive for your patented business will lower your tax savings significantly.

Showcasing your cost of subscription and training

The training and subscription costs can be paid for by the company without requiring the benefiting employee to pay income tax. Your business may be able to deduct these costs, meaning that the expansion of your workforce will not incur any taxes.

Investing in the EIS, or Enterprise Investment Schemes

The Enterprise Investment Scheme (EIS) is another instrument that can lower your corporate tax liability. By offering investors tax breaks, this instrument can promote investment if you are running a relatively small-scale, yet/or riskier business. Professional accountants for small businesses will help you learn more about EIS and its way of functioning.

Using Capital Gains Tax Reliefs

Capital gains tax relief plays a pivotal role in reducing the overall tax liability. All you need to do is know the criteria and chalk out the right strategies.

Not missing the tax deadlines

Never miss your tax deadlines. This will cost you higher interest rates, penalties, and other costs. That is why it is imperative that you pay tax files and make the payments on time. Ensure that every document is handy and organised by the time the deadline for payment arrives. You need to make timely filings and payments to make sure that you maximise your corporate tax liability and take the fullest advantage of various tax solutions.

Know the tax deduction rules properly.

You need to have a sound knowledge of the rules and regulations pertaining to tax deductions. This ensures that you have legal deductions that are on par with the tax legislation norms. Your chartered accountant will help you in your effort to know these deductions and related norms.

Investing in New Plants and Machinery

You need to know the right way to invest in plants and machinery strategically. It will help you gain invaluable capital allowances. Besides, it will also reduce your taxable profits, which will in turn lower your corporation’s tax bills.

So you see, these are some of the best ways of reducing your corporation’s tax bills, something that is imperative in your business endeavour. For further details, you may get in touch with Biz Accounting Solutions Ltd, as we are one of the most competent accounting experts in the UK. Call us to book our service.

The post What Are the Different Ways of Reducing Corporation Tax Bills? appeared first on BIZ Accounting Solutions.

Personal allowance: £12,500 (for 2020-21) similar to 2019-20.

But this allowance was reduced by £1 for every £2 income from £100,000 to £125,000.

• Personal allowance income limit; £100,000 (consistent with 2019-20)
• Basic rate tax payer- £1000 (for 2020-21 & 2019-20)
• Higher rate tax payer -£500 (for 2020-21 & 2019-20)
• Additional-rate tax payer – £0 (for both)
• Dividend allowance- £2000 (for 2020/21 & 2019-20)
• Trading property allowance- £1000 (for both).

However, an important note here is that traders/landlords having gross income from all these sources in a sum amount exceeding £1000 have the right to deduct their allowance from their gross income mainly as one alternative to claim their expenses.

• Marriage partner transfer allowance-£1250 (for both years).

If there are unused personal allowances, they may be transferred to the civil partner or spouse. The person receiving the sum will not be entitled to any higher or extra rate tax.

• Married couple allowance- £9,075 (2020-21) in comparison to £8,915 (2019-20)

Minimum amount allowance for (2020-21) is £3,510 in contrast to £3,450 (in 2019-20). Also, the income limit saw a slight increase in (2020-21) with £30,200 as opposed to £29,600 (in 2019-20)

• Blind individual’s allowance- £2500 (for 2020-21) in comparison to £2450 (2019-20)
• Renting a room allowance-£7500 (for both years)

INCOME TAX BANDS & RATES (Comparison between 2019-20 & 2020-21)

• The starting rate of savings is up to £5000 for 2020-21 (similar to last year).

Note- the starting rate doesn’t hold if the taxable sum surpasses the starting rate limit.

• Basic rate band- £37,500 (for both years)
• Higher-rate band-£37,501 to £150,000 (both years)
• Additional-rate band- Exceeding £150,000 (both years)
• Basic rate-20% (no changes to last year)
• Higher-rate- 40% (similar to 2019-20)
• Additional-rate- 45% (consistent with 2019-20)
• Dividend basic rate- 7.5% (both years)
• Dividend higher-rate-32.5% (both years)
• Dividend additional rate-38.1% (both years)

LIMIT FOR INDIVIDUAL SAVINGS ACCOUNTS

• The entire investment limit offers an allowance of £20,000 (for 2020-21) which is consistent with last year’s overall limit.
• As for junior account investment limit, the allowance is £9,000 (for 2020-21) in comparison to last year which was £4,368

CAPITAL GAINS TAX SHEET (COMPARING 2020-21WITH 2019-20)

Starting with Main Taxes which include:

• Individual Basic-rates- 10% for both years
• Individual Over basic-rate- 20% for both years
• Estates and Trust- 20% for both years

• Surcharge for profits on chargeable housing property is 8% for 2020-21(similar to last year).
• Annual Exemption for Individuals (£12,300 for 2020-21 in comparison to £12,000 for 2019-20) and Trusts (£6,150 for 2020-21 showing a slight increase to £6,000 in 2019-20)
• Entrepreneur’s relief- lifetime limit (starting from 11.3.20) is (£1m for 2020-21 as opposed to £10m in 2019-20) and applicable rate (10% for 2020-21 is consistent with last year)
• Investor’s relief – lifetime limit is (£10m for 2020-21 consistent with 2019-20) and applicable rate (10% for 2020-21 also consistent with last year)

SELECTED RATES (Comparing 202021 with 2019-20)

• Basic State Pension Allowance – £134.25 (for 2020-21) as to £129.20 (for 2019-20)
• New State Pension Allowance – £175.20 (for 2020-21) in comparison to £168.60 for (2019-20)

Statutory Pay Standard Rate Allowance – Entailing the Average Weekly Yield [£120 (£118) or Over]

• Sick Pay- £ 85 (for 2020-21) as to £ 94.25 (for 2019-20)
• Shared Parental Pay – £ 20 (for 2020-21) in comparison to £148.68 (for 2019-20)
• Paternity Pay–£ 20 (for 2020-21) in comparison to £148.68 (for 2019-20)
• Adoption Allowance –£ 20 (for 2020-21) in comparison to £148.68 (for 2019-20)

PENSION ALLOWANCE (2020-21)

The lifetime allowance limit has increased slightly this year £1,073,100 in comparison to 2019-20 figures which was £1,055,000.

However, the annual allowance limit (£40,000) and the money purchase annual allowance limit (£4,000) for 2020-21 remains consistent with last year.

(DISCLAIMER)

These aforementioned rates are to be used for guidance only. Some figures are subjected to change due to different situations and individuals.

The wise choice would always be to consult with a professional and experienced tax advisor working in Wokingham before making any taxation decision.

BIZ ACCOUNTING SOLUTIONS LTD– consists of a diligent group of tax advisors and accountants working across Wokingham to help you out.

Our taxation specialists are up-to-date with the latest Tax Rate Sheet for 2020-21 and will help you with Corporation tax return, Inheritance tax, Capital Gains tax and even during preparing and filing accurate returns.

CALL US FOR OUR TAX RETURN SERVICES TODAY!

The post Tax Rates & Bands Card for 2020-21- A Discussion! appeared first on BIZ Accounting Solutions.