As a hardworking business owner, you want to ensure that you’re retaining as much of your earnings as possible.
But how can you minimise your tax liabilities and maximise your savings?
This new tax year provides an opportunity to start off on the right foot by staying up-to-date with the latest changes and implementing the right strategies.
With recent tax increases and changes to business tax reliefs, it’s important to consider whether you’re making the most of any tax-saving opportunities.
Corporation Tax
One notable change is the increase in Corporation Tax for most profitable businesses, with the main rate rising to 25 per cent from 1 April 2023.
Your company’s tax rate will depend on its taxable profits.
For example, profits up to £50,000 will be charged at a 19 per cent rate, whereas profits of £250,000 or more will be subject to the 25 per cent rate.
For profits between these thresholds, a sliding scale applies, and you may be eligible for marginal rate relief, which reduces your Corporation Tax rate gradually.
Find out more about the Corporation Tax Uplift in our guide.
To plan ahead, consider utilising Capital Allowances.
Although the super deduction has ended, the Spring Budget introduced full expensing, which allows you to write off the full cost of qualifying plant and machinery between 1 April 2023, and 31 March 2026.
You can also benefit from the Annual Investment Allowance, which lets you deduct up to £1 million per year of the cost of qualifying plant and machinery from your profits.
Writing Down Allowances allow you to deduct a percentage of qualifying items’ value from your annual profits.
If your business seeks to advance science or technology, you may qualify for research and development tax credit, which can reduce your company’s tax bill or provide a cash sum.
However, new R&D reforms came into effect from 1 April 2023, that require you to submit a pre-notification to HM Revenue & Customs (HMRC) digitally.
There are also new rates of relief to be aware of, such as the reduced additional deduction rate for the SME scheme and increased RDEC rate.
Navigating these changes and optimising your business’s finances can be complex, so seeking expert advice on available reliefs is essential.
Contact our team today for assistance in maximising your take-home income.
