AS YOUR LIMITED COMPANY FINANCIAL YEAR END DATE APPROACHES, THERE ARE CERTAIN STEPS YOU CAN TAKE TO REDUCE YOUR CORPORATION TAX BILL.

If you have made a profit, those profits will be subject to Corporation Tax so please see below on how you may be able to reduce that tax bill.

COMPANY EXPENDITURE BEFORE YEAR END

The more business expenditure the company incurs, the less corporation tax the company will need to pay.  If there are certain purchases the company is going to make over the coming months, just before the financial year end is the best time to do so.

You could consider the following;

• Office supplies
• Staff Events up to £150.00 including VAT per head (one per year)
• Software costs
• Mobile telephone
• Insurances

For example, if your company has a year end on 31 March 2019, then and you purchase some office supplies for £1,000, the company will obtain the corporation tax relief (of £190) for the liability due on 01 January 2020.  If, for example, the purchase is made on the 01 April 2019, corporation tax relief will be obtained for the liability due on the 01 January 2021 instead – a big timing difference.

CAPITAL ALLOWANCES

The Annual Investment Allowance – tax relief for business equipment/capital expenditure – allows you to claim a 100% deduction against profits on said business expenditure.  The current limit has been increased to £1,000,000 from 01 January 2019.  Therefore, if you are planning on purchasing new plant & machinery, a new commercial vehicle, new computer equipment, then just before the year end would be the best time to do so.

For example, if your company has a year end on 31 March 2019, then and you purchase some computer equipment for £10,000, the company will obtain the corporation tax relief (of £1,900) for the liability due on 01 January 2020.  If the purchase is made on the 01 April 2019, corporation tax relief will be obtained for the liability due on the 01 January 2021 instead – a big timing difference.

STAFF BONUSES

If you are thinking of rewarding staff for good performance, then before the company’s yearend would be a great time to do so.

PENSION CONTRIBUTIONS

You will need to ensure the contribution comes from the Limited Company, is defined as such, and is paid before the year end.

Please contact us to discuss any of the above points in further detail – you can call us on 01933 22994 or book a meeting with Paul here.