Stop handing money to HMRC that you don’t need to.
With the tax year-end coming up, it’s a great time to step back, review your position and plan ahead.
⚠️ Quick note – It doesn’t matter if your company’s year-end isn’t 31st March. We’re talking about this now because the tax year-end is a great prompt to review your position, plan ahead and avoid last-minute decisions later in your own financial year.
Here are some simple (and completely legit) ways to reduce your corporation tax bill ↓
1. Capital Allowances
Buying equipment, laptops or machinery?
👉🏼 Most purchases qualify for 100% tax relief
Reduces your tax bill straight away.
2. Pension Contributions
Your company can pay into your personal pension (up to £60k per year in most cases)
✔️ Reduces corporation tax
✔️ Builds your personal wealth
✔️ No National Insurance charges
3. Electric Vehicles
Thinking about a new car?
👉🏼 Electric vehicles currently qualify for 100% tax relief
Remember though, that company cars can lead to a personal (albeit lowish) benefit-in-kind tax.
4. Research and Development (R&D)
Working on something new in your business?
This isn’t just for scientists in labs…
If you’re:
→ Improving systems
→ Developing new services
→ Solving technical challenges
👉🏼 You might qualify for additional tax relief
5. Strategic Timing
Planning to invest in your business?
👉🏼Timing matters.
Bringing forward purchases before your year-end can:
→ Reduce this year’s tax bill
→ Improve cash flow planning
6. Employee Bonuses
Paying bonuses before year-end?
👉🏼 These are usually tax-deductible
👉🏼 But need to be properly documented
7. Giving Back
Charity donations or local sponsorships?
✔️ Good for your community
✔️ Also reduces your corporation tax bill
Your corporation tax rate might not be fixed. Not all companies pay the same corporation tax rate.
👉🏼 If your profits are:
Under £50,000 → 19%
Over £250,000 → 25%
In between → you get marginal relief (so an effective rate somewhere in the middle)
What does that mean in real life?
👉🏼 Reducing your profit doesn’t just reduce the amount being taxed
👉🏼 It can actually move you into a lower tax band too
So the right planning can have a double impact on your tax bill.
Remember that owning more than one company will also impact the rates you pay.
⚠️ But here’s the bit most people get wrong…
You can’t just spend for the sake of saving tax.
If you’re spending £10,000 just to save £2,500 in tax…
👉🏼 you’re still £7,500 worse off.
This is about smart planning, not panic spending.