How to Reduce Corporation Tax

Companies in the UK, as well as their branches and overseas subsidiaries, are required to pay corporation tax on their yearly income. 

Taxable Rates in the UK

The tax rate for companies with a taxable profit

•  Above GBP 250,000:  25%,
•  Below GBP 50,000: 19%.
•  GBP 50,000 to GBP 250,000: 25% reduced by a marginal relief, providing a steady increase in the average tax rate.

Ways to Reduce Corporation Tax

• Request relief for research and development (R&D) of new products/software/processes
• Claim all business expenses.
• Claim capital allowances in the event the assets are purchased for business purposes.
• Pay yourself an ordinary income (salary). The pay categorised as a business expense.
• Claim their mileage using the official HMRC-approved rate, where employees and business owners use their own vehicles.
• Claim a lower tax rate on profits earned from patented inventions via the Patent Box scheme.
• Claim a reduction in tax if the contribution is made towards pension schemes on behalf of directors/employees.
• Pay HMRC as soon as possible; the company will gain from any early tax payment to HMRC.
• Give employees shares to increase staff retention rate.
• The creative industry can claim additional tax relief if they are in the production of animation programmes/video games/theatrical productions/certain films/TV programmes etc.

Unicorn Accountants, a leading online accountant, London, offers tax advice to businesses and ensures they comply with regulations and guidelines as stipulated by HMRC. When it is feasible, we assist clients in minimising their tax obligations and optimising their tax position.

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