Maximizing Deductions: Tax-Saving Strategies with a UK small business accountant

How to Pay Less Tax

There are lots of ways to reduce your tax bill legally, whether you’re an employee or self-employed, a landlord, investor or pensioner. We explain how simple checks for Small Business Accountant could boost your take-home earnings with minimal effort and how to take advantage of tax reliefs and government schemes.

Here are some easy tips and tricks that can help you cut your tax bill to put more pounds in your pocket.

Reduce your income tax

Check your tax code through a UK Small Business Accountant

Your tax code indicates how much tax HMRC will collect from your salary. You can find it on your payslip.

Find out the most common ones in our guide to understanding your tax code.

Claim tax credits using a UK Small Business Accountant

Tax credits provide extra money to those looking after children, disabled workers, and other folks on low incomes.

The two main types you can claim: working tax credit and child tax credit. 

People on tax credits are due to be moved to Universal Credit by 2024. You can apply sooner, but keep in mind that you can’t claim tax credits if you already receive Universal Credit.

Pay into a pension scheme using UK Small Business Accountant

Contributions to your company’s pension scheme. This includes any additional voluntary payments you make, which can be made from your gross pay before any tax is charged. This is where a Small Business Accountant comes in handy. 

The government will top up your pension with tax relief, and give you a free bonus for saving for retirement. You can use our pension tax relief calculator to work out how much you could save.

Benefit from marriage allowance hire a small business accountant

Marriage allowance is a tax perk that benefits couples in cases when one partner earns less than the personal allowance.

If you are a legally married pair or in a civil partnership, such couples can transfer 10% of the personal allowance from the lower-earning partner to the higher-earner, equating to £1,260 in 2023-24. This will potentially save you up to £250 in tax as a couple. To qualify, the higher earner must be a basic-rate taxpayer.

Meet the tax return deadline using a UK small business accountant 

If you’re one of the 12m people who need to submit a self-assessment tax return, make sure you don’t miss the deadline – it’s a costly and easily avoided mistake.

For online submissions, you have until 31 January 2024 to send in your 2022-23 return. But if you want to file on paper, you’ll need to submit it by 31 October 2023.

Miss the deadline, and there’s an automatic £100 fine – even if you don’t owe any tax. There are additional penalties if your submission is three, six, or 12 months late – and separate charges if you haven’t paid your tax bill on time.

  • Use the Which? Tax calculator to tot up your return and submit it directly to HMRC. Reclaim overpayments in taxes.

If you are a non-tax filer, or your income unexpectedly falls during a year. Then you may find that you’ve been taxed more than you should have done. This is because HMRC assumes your personal allowance is equally used each month. 

To reclaim, fill out form R40 from HMRC, or call them. 

If you are filing a self-assessment tax return, any refund owed by HMRC won’t be processed until it receives the money – planning ahead and filing well before the January deadline means you may receive a rebate quicker, as the tax office is likely to be quieter. So the sooner you file, the better.

Employee tax benefits

Get a season ticket loan.

Some employers will offer you a tax-free loan to buy your season ticket, potentially saving you hundreds on travel costs. Ask your employer if they’re part of the scheme.

Claim tax-free childcare

Under the tax-free childcare scheme, you can claim back 25% of your childcare costs.

To set up an online account and manage payments to your childcare provider, you need to deposit £8, and the government will add £2 to the account. This offer is available every three months up to £500 or £1,000 if the child is disabled.

You’ll have to meet set criteria, including having a child under 11 and earning less than £100,000.

Get a company car

If you are entitled to a company car. Then you should consider whether it would be more tax-efficient to take a monetary equivalent in pay instead.

Switch to a low-emission car.

If you are changing your business car, consider a low-emissions option. These are now taxed at a lower rate of their list price than cars with a higher CO2 rating. 

The tax rate for company cars will be frozen at 2022-23 levels until the end of 2024-25.

Cut tax on your savings

Maximize your personal savings allowance

In 2023-24, you can earn £1,000 of interest on the money you save tax-free if you’re a basic-rate tax filer. If you’re a higher-rate person, your tax-free allowance is about half a thousand or £500. 

You’ll only pay tax on saved money income that goes beyond this threshold.

This will no longer be cut down automatically by the savings provider. If tax is due, you’ll need to pay it via self-assessment or have it deducted via PAYE.

Keep in mind that you won’t have a savings allowance as an additional rate (45%) taxpayer.

Make the most of your tax deduction allowance.

Everyone can take advantage of their yearly tax-free Isa allowance. For the 2023-24 tax year, you can deposit up to £20,000 into Isa accounts. This is unchanged from 2022-23.

This can all be put in a cash total. Also, can be stocks and shares Isa, or split between both money and stocks and bonds. We explain how this works in our guide to national tax rules and allowances.

Use the starter rate for savings.

If your income from a job or pension is below £12,570 in 2023-24, but you earn income through interest on savings, you may also qualify for the starter savings allowance. 

Any interest you earn up to £5,000 is tax-free. This will be in addition to your personal savings allowance, meaning you could earn as much as £18,570 before paying tax.

Pay less tax if you’re self-employed.

People who work for themselves can benefit from a range of tax perks. Not sure if you’re self-employed? Check HMRC’s definition of self-employed in our guide. 

Tax-deductible expenses

Many expenses incurred while running a business can be deducted from your profits. This helps reduce your overall tax. This could include things like fuel, phone costs, or running costs for your home office.

Self-employed car costs

You can generally claim the running costs of a car you use for business (though not the cost of buying one). If you use the same car in your private life, you can get a proportion of the total costs. A small business accountant can help in this. 

To do this, you’ll need to either add up all of your motor expenses for the year or work out the percentage of business miles you have. Then you can claim a fixed-rate mileage allowance for business travel. 

Cash-flow boost for self-employed

As a business owner, one can choose when your accounting year ends – and it’s worth choosing carefully. 

If you pick an accounting year-end date earlier in the tax year. Then you will have more time to pay the taxman on your profits. This means that as your profits grow. Also, your tax bill will rise more slowly. The more time you have, the less likely you’ll struggle to pay your tax bill on time.

Annual losses

If you make a loss in one tax year, you can carry it onward and offset it against profits from a more successful year. This decreases your taxable income.

Payments on account

Generally, people who are self-employed will be required to pay tax in two advance payments. One in January and then July. The amount you’ll pay will be based on the previous year’s tax bill.

So, if you expect to earn less in 2023-24 than in the year before, you can apply to reduce your payments on account. You’ll need to submit form SA303, either online or via mail to HMRC.

Cut your investments tax bill

Dividend allowance

Each year, you can earn a certain amount of income from dividends before paying taxes.

In 2023-24, the tax-free dividend allowance is £1,000. This will reduce to £500 for 2023-24. It was £2,000 in 2022-23.

You can find out more in our guide to dividend tax. 

Capital gains tax (CGT) allowance

Capital-gains are the gains you earn from selling some investments, including second homes, art, antiques, and shares. 

Capital gains of up to £6,000 are tax-free in 2023-24. Married couples and in-law partners who own assets together can claim a double allowance of £12,000. 

This reduced from £12,300 in 2022-23.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top