At Greystone Advisory, we believe that running a tax-efficient business is one of the easiest ways to boost your bottom line without working harder. It’s about being smart, organised, and making the most of the reliefs and allowances available to you.
Here are 10 simple yet powerful ways to improve your business’s tax efficiency:
1. Choose the Right Business Structure
The way your business is set up (sole trader, partnership, limited company) affects how much tax you pay. A limited company, for example, can be more tax-efficient at certain profit levels.
2. Pay Yourself Smartly
Rather than taking all profits as salary, a mix of salary and dividends can significantly reduce your tax bill. Dividends attract lower tax rates than income.
3. Claim All Allowable Expenses
You can deduct legitimate business expenses before calculating profit. This includes things like travel, office supplies, marketing, and even a portion of home office costs if you work from home.
4. Use Capital Allowances
When you invest in assets like equipment, machinery, or even electric vehicles, you may be able to claim significant tax deductions through Annual Investment Allowance (AIA) or First-Year Allowances.
5. Consider Pension Contributions
Making pension contributions through your company can reduce your corporation tax bill and build your personal retirement savings – a win-win!
6. Make Use of the Employment Allowance
If you have employees, you might be eligible to claim up to £10,500 off your National Insurance bill each year through the Employment Allowance. It’s a simple but often missed saving.
7. Plan for VAT Efficiently
If your turnover is close to the VAT threshold (£90,000 from April 2024), think about how best to structure invoicing or whether voluntary VAT registration could actually be beneficial. Schemes like Flat Rate VAT might also save money.
8. Use the £1,000 Trading and Property Allowances
If you have small amounts of extra income, these allowances can make those earnings tax-free, keeping things simple.
9. Make Use of Family Members
Employing family members (properly and fairly) can be a tax-efficient way to spread income and utilise personal allowances, as long as it’s genuine work and commercial pay.
10. Stay Ahead with Professional Advice
Tax rules change regularly. Regular reviews with your accountant can help you take advantage of new reliefs, avoid pitfalls, and plan proactively rather than reactively.
Key Takeaways:
- Being tax-efficient isn’t about risky strategies, it’s about being smart and structured.
- Simple planning can significantly reduce your tax burden.
- Taking action early is better than waiting until the year-end.
Want to make sure your business is as tax-efficient as it could be?
Contact the Greystone Advisory team today, we’ll guide you through smart, tailored solutions that work for you!
