DNS-Accountants

Tax Saving Solutions for Limited Company Business Owners

Do you own and trade through a limited company? If yes, then here are the top 5 tips of tax saving for Limited Company, or saving your company some Corporation Tax, or extracting money from the company tax efficiently.

Tax Saving Solutions for Limited Company Business Owners

Tax Saving Tips for Limited Company Are:

1. Pension

Your company can make contributions towards your pension. The payments are deductible expenses for Corporation Tax purposes in the year they are made. A Small Self-Administered Scheme (SSAS) is a pension trust set up by a limited company or a partnership. SSASs are primarily set up by private and family run limited companies for the benefit of the owner directors and senior employees. SSAS is an occupational pension scheme set up under trust with up to 11 members. SSAS is particularly suitable for controlling directors.

2. Dividends

One of the benefits of being a shareholder in a limited company is the ability to be receive dividends. Dividends are taxed at a lower rate than other kinds of income and do not attract a National Insurance liability.

Your company must have sufficient retained profits in order to pay any dividends and the correct paperwork must be completed and declared properly in accordance with company law requirements. We can help you with this.

3. Entrepreneur’s Relief

Subject to eligibility (e.g. you must have held shares in the company and been a director or employee for a year or more), you may qualify for Entrepreneurs’ Relief on the sale of your limited company. The current ER rate is a mere 10%, compared to standard CGT rates of 18% or 28% (higher rate).

4. Family Members

You may consider splitting your shareholding with your spouse, as you could benefit from using your other half’s tax allowance (especially if they have no other source of income). You should consult an accountant before considering this option, as so-called ‘income shifting’ is a thorny issue in accounting circles.

Also, if your family members help or work in the business too, then you can consider whether they should own shares in the company too. That way you can take advantage of their basic rate allowance and pay dividends to them as well.

If you have children aged at least 13 who earn less than £7,956, and they help out in your business, then you can pay them a wage to reduce taxable profits. You can also pay your spouse or partner for any work they do in the business. We can advise you on the most tax efficient salary levels.

5. Company Cars

Have you considered whether the cars used in your business would be better owned personally? If you use a company car personally you will be taxed on the benefit-in-kind and the company will pay Class 1A National Insurance.

Owning the car personally will not attract the benefit in kind and mileage can be claimed at the approved rate of 45p/25p per mile. The right choice however will depend on the circumstances and the vehicle involved.

We can review your situation and advise whether it’s more tax efficient to own the vehicle yourself, or run it through your company.

Speak with an expert

Any questions? Schedule a call with one of our experts.

About the author
Blog Author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.

  • Book a free consultation
Receive accounting news and updates in your inbox

About the author
Blog Author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.

DNS-Accountants

See how dns can help
you today.

Save tax
Save tax

Our experts will work with you to reduce your corporation, personal or any other tax liability, all within the rules of the UK tax legislations. We’ll ensure you’re claiming all allowances and expense claims that you would be elegible for.

Reduce your admin
Reduce your admin

We give free software to all of our clients. You’ll be able to raise sales invoices, snap pictures of receipts and be MTD compliant with ease. You can even manage your business anywhere there’s an internet connection, thanks to our mobile app!

Grow your business
Grow your business

Successful business owners are those that are on top of their numbers. Businesses are driven by the numbers behind them. If you’re not reviewing your profit & loss or balance sheet regularly, how would you know how your business has performed and how would you make proper business decisions? We can help you make sense of your numbers.

Free Business Software!

Limited time only!

Free Business Software

Say Goodbye to Bookkeeping Hassles: Nomi offers Free Receipt Processing and big savings!

  • Built in payment solutions.
  • Track profitability, debtors and creditors
  • Snap pics of receipts with the mobile app
  • Free Receipt Processing
  • Hasslefree Bookkeeping
  • Cost Reduction
Get Started
Close nomi