How to reduce your corporation tax bill: part two

In our previous post, we discussed common ways that UK businesses can reduce their tax liabilities over the course of their financial year.

But there are plenty of other options for companies that want to employ more creative tactics.

Here’s our pick of some of the lesser-known means of making significant savings.

1. Offer an Employee Share Scheme

Did you know that you can reduce your corporation tax if you offer shares to your employees?

There are lots of different share schemes that allow you to distribute equity in your company, including Share Incentive Plans (SIPs), Save As You Earn (SAYE) initiatives, and Company Share Option Plans (CSOP).

Aside from its tax relieving benefits, opening an Employee Share Scheme is a great way to motivate your teams and retain your top talent; if they have a personal stake in your firm, employees will be directly invested in the success of the business, and will be inclined to place more of their time and energy towards fulfilling your company’s mission.

If you’re interested in exploring share schemes further, the team here at Dartcell can help you compare what’s on offer and choose a plan that suits your business and its workers.

2. Get capital allowances on commercial property

Capital allowances can be claimed on commercial buildings, and this kind of relief is available regardless of whether you own the property privately or through your limited company. You can also still claim for capital allowances if you bought the asset some time ago, although the rules on making retrospective claims have tightened in recent years.
The legislation around capital allowances on property can be complex and confusing. Feel free to contact us directly for more information and advice on whether your expenditure qualifies. The earlier you can speak to us, the better – in fact, it’s often advisable to get our guidance before you make a sale or purchase.

3. Look into the work from home allowance

HMRC allows you and your employees to claim a portion of your home expenses to meet the (ever-rising) costs of heating and lighting the areas in which you work. This kind of compensation has been especially welcomed by employees in the wake of the coronavirus crisis, which has arguably changed the way we work forever.

Depending on the number of workers you have, and whether they are working from home on a permanent, temporary or flexible basis, the monthly payments you make via the work from home allowance can start off small. However, it’s important to remember that every eligible expense such as this will help to lower your tax bill overall.

4. Get added relief if you are a creative enterprise

Additional corporation tax relief is available to companies that produce:

  • Video games
  • Animation programmes
  • Films and TV programmes (that meet certain criteria)
  • Theatre productions
  • Orchestral concerts
  • Qualifying exhibitions in museums or galleries

There are eight different schemes. You may be eligible for some or all of them as long as your production passes a cultural test and, in the case of TV and film work, has received suitable certificates from the British Film Institute.

5. Claim all available loss reliefs

If you have suffered recent losses, you may be able to carry them back to a previous financial year. This will generate a tax refund and give your company a much-needed cash injection. In some cases, you can also carry these losses forward against future profits or surrender them to another company within your group, if it makes financial sense to do so.

6. Pay your bill early

In the same way that you can incur fines if you fail to meet your corporation tax deadlines, you can in fact be eligible to receive some of your tax bill back in the form of interest if you settle your bill early. Think of it as HMRC’s way of rewarding you for staying on top of your tax affairs!