Because you’re probably already aware of the advantages of contracting through a limited company, we’ll concentrate on tax savings in this post. We’ve compiled a list of five useful hints that will apply to you; however, some of them should be reviewed with your accountant.
1. Savings on taxes on your company income:
As a director of your own limited business, you have more control over your income and how you extract it from your firm than if you were constantly employed. This allows you to select how your pay and dividends should be split to benefit from the lower tax rate.
2. Properly claiming expenses:
Examining your spending is one of the most underappreciated tax techniques you can utilise without straying into ethical grey areas. Many professionals, particularly directors, may find it difficult to keep track of their spending.
You may save a lot of money on taxes if you don’t lie about what you bought and only claim products acquired for business purposes. Even little expenses, such as those spent working from home, should be considered.
A company in the IT industry, for example, can properly deduct costs for software and hardware. It is a viable and genuine cost if they are necessary to extend into other business areas or assist the market.
3. Expenses and Value Added Tax (VAT):
Have a lot of bills to pay? Your limited company may pay for all of your business costs, which helps lower the corporation tax owed for the year. If you are VAT registered and purchase goods or services, you may be able to reclaim the VAT to reduce your company’s VAT tax.
4. Salary options:
Another benefit of becoming a business director is that you may be able to choose from a variety of remuneration possibilities. You may accept a salary based on your current personal tax allowance, and you might cut all Employee/Employer National Insurance with the aid of Employer Allowance. You might also consider setting your salary below the secondary earnings level, saving you money on taxes.
5. The annual investment allowance:
Are you looking to improve your computer hardware? As long as the item is for business use and the invoice is issued in the company’s name, the entire cost of the acquisition can be deducted from the company’s earnings, lowering corporation tax in the year of purchase.
If you found the above tax suggestions helpful, there are many more you might use to see immediate improvements. Working with the appropriate accounting firm may make a huge impact on how your company handles its finances.
At McCarthy Browne, we make it incredibly simple for you to begin creating ethical tax savings for your company and industry. Contact us now to see how we can assist you in implementing the tax as mentioned above guidelines and unique choices tailored to your company’s needs.