Are you looking for ways to help your company be more tax-efficient? You wouldn’t be the only one. In fact, it’s one of the top things people search for on Google! And whilst there’s a lot of obvious advice out there, do you know these lesser known tips?
Tip #1 – Client Entertainment
Are you recording all of your client entertainment? Client entertainment isn’t deductible for Corporation Tax but having the company pay where the entertainment is for the furtherance of business can still offer personal tax savings. If you cover it personally, you’d first pay tax on salary or dividends before using the money.
Tip #2 – Cars
Electric Vehicles (EVs) and Plug-in Hybrid Electric Vehicles (PHEV) can offer major tax savings. EVs have a low 2% Benefit-in-Kind rate, reducing company car tax, while PHEVs vary by electric range. Businesses can claim 100% First-Year Allowance on new EVs, cutting Corporation Tax.
EVs also currently benefit from zero road tax until 1st April 2025, and VAT savings on charging. Plus salary sacrifice schemes make EVs even more tax-efficient for employees.
Tip #3 – Business Mileage
Business mileage can reduce tax by allowing tax-free reimbursements or deductions on fuel and vehicle costs. If you use your personal car for business, your company can reimburse you at HMRC’s Approved Mileage Rates, or you can claim tax relief if paid less. Limited companies can deduct fuel costs for company cars, and VAT-registered businesses can reclaim VAT on business fuel. Sole traders can deduct either mileage or actual vehicle expenses.
Tip #4 – Directors Loan Account Management
Are you managing your Directors Loan Account to ensure you are paying personal tax at the most efficient rates? Efficiently managing withdrawals, repayments, and the timing of salary/dividend combinations ensures you minimise personal and corporate tax liabilities.
Tip #5 – Set up a Relevant Life Policy to pay your life insurance through your Limited Company
If you run a limited company, a Relevant Life Policy (RLP) is a tax-friendly way to sort out life insurance for yourself or your employees. Instead of paying for a personal policy from your own pocket, your company can cover the cost, and there are some serious tax advantages to doing it this way.
If you’d like further tax saving advice and tips, contact the team at Bracey’s Accountants today.
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