Time is running out! With the April 5th tax deadline fast approaching, you have just weeks left to make 4 crucial tax moves that could save your business thousands of pounds in tax.
Many business owners in the UK overpay in tax each year simply because they don’t take action in time. Once the deadline passes, valuable tax allowances and tax breaks disappear forever for the tax year.
The Real Cost of Missing UK Tax Breaks and Allowances
According to recent studies, UK businesses collectively overpay billions in unnecessary tax every year. This isn’t due to complex tax saving schemes being missed – it’s often because of simple actions not taken before key deadlines.
At KPPCA Chartered Accountants, we see this pattern repeat year after year. Business owners who plan ahead consistently pay less tax than those who don’t.
4 Essential Business Tax Incentives to Claim Before April 5th
The good news? There’s still time to act. Here are four key strategies that could significantly reduce your tax liability:
1. Maximise Pension Contributions: A Top UK Tax Allowance Strategy
Pension contributions stand out as perhaps the most powerful tax-efficient strategy available to UK business owners, offering substantial immediate tax savings while simultaneously building your long-term wealth.
For higher-rate taxpayers (40% tax band), the benefits are remarkable:
- A £10,000 pension contribution effectively costs you just £6,000 after tax relief
- This represents an immediate 40% return on investment through tax savings alone
For additional-rate taxpayers (45% tax band), the advantages are even greater:
- The same £10,000 pension contribution costs just £5,500 after tax relief
- This equates to an immediate 45% return before any investment growth
Important: To claim the full 40% or 45% tax relief, you must have paid sufficient tax at those higher or additional rates. Our tax specialists can help determine your exact eligibility.
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Review your current pension contributions and consider making additional payments before the tax year ends. Need help? Contact one of our tax advisors now to find out how we can help you to maximise your tax savings.
2. Business Tax UK: Bring Forward Planned Business Expenses
Planning to invest in new equipment, software, or services in the coming months? Bringing these purchases forward into the current tax year could reduce your immediate tax liability.
What expenses can you claim for companies?
- The Annual Investment Allowance (AIA) provides 100% tax relief on qualifying plant and machinery up to £1,000,000
What can you claim on AIA?- Equipment and machinery used in your business, including vehicles (excluding cars).
- Costs associated with demolishing plant and machinery.
- Integral features of a building, such as electrical systems and plumbing.
- Certain fixtures, including fitted kitchens and bathroom suites.
- Alterations made to a building for the installation of plant and machinery (excluding general repairs).
- Many digital investments qualify for tax relief, including software subscriptions, website development, and IT equipment
What expenses can you claim as sole traders?
- Business expenses reduce your taxable profit directly
- Consider prepaying for services you’ll use in the next tax year
Remember to keep proper documentation for all business expenses to ensure they’ll be accepted by HMRC. Need help with recording and tracking all the financial transactions of your business? Contact us today to see how we can help you to save your tax and your time with our bookkeeping services.
3. Maximise Your UK Tax Benefits: Use All Available Tax Allowances
Several valuable tax allowances reset on April 6th – failing to use them means losing them forever.
We have summarised some key tax allowances for you to utilise:
- ISA allowance: Up to £20,000 can be invested in ISAs, with all returns being tax-free.
- Capital Gains Tax (CGT) allowance: Currently £3,000 for 2024/25, and it is expected to remain at the same level for the next financial year.
- Dividend allowance: Currently £500, allowing extraction of this amount in dividends without personal tax
- Trading allowance: £1,000 of tax-free income for those with small side businesses
Some allowances have been reduced in recent years, making it even more important to use them while available. Contact us to make sure that you are fully compliant with the changing tax rules!
Potential tax savings are varied based on individual circumstances, contact one of our experts to find out more potential possibilities to maximise your tax savings.
4. Tax-Efficient Business Strategies: Extract Profits Wisely
How you take money out of your business has a significant impact on your overall tax position. Different methods have different tax implications:
- Salary: Subject to income tax and National Insurance, but counts toward pension calculations
- Dividends: Lower tax rates than salary but require available profits
- Bonuses: Can be timed to fall in the most tax-advantageous period
- Pension contributions: Highly tax-efficient but locks away capital until retirement age
The optimal strategy typically involves a combination of these methods, carefully balanced to minimise your tax liability while meeting your income needs.
We Are Here to Help
At KPPCA, we’ve been helping businesses maximise their tax benefits for over 18 years. Our experienced accountants specialise in identifying every available tax allowance and incentive tailored to your specific situation.
Don’t miss out on these valuable business tax UK opportunities! With the April 5th deadline approaching rapidly, taking action now could save you thousands in unnecessary tax.
Book Your Tax-Saving Consultation Today – Our tax specialists will create a personalised strategy to ensure you never pay more tax than legally required while keeping you fully informed every step of the way.
