Reducing Corporation Tax

What is Corporation Tax? 

Corporation Tax is the tax that is due on business profits and on any gains made from investments or from a business selling its assets. It applies to all UK limited companies (plus foreign companies with UK offices) and is collected by the government.

If your company is registered with Companies House, you will be paying Corporation Tax at the rate appropriate to your company profits. However, there are various ways you can reduce this liability, all within HMRC rules.

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How much is Corporation Tax?

The latest Corporation Tax rates are:

  • 25% for profits of £250,000 or over
  • 19% for profits of £50,000 or less

If business profit is between £50,000 and £250,000, the company can claim Marginal Relief which serves as a gradual increase in Corporation Tax rates from the lower rate of 19% up to 25%.

Certain business expenses are tax-deductible, such as rent for the business premises, property insurance, and day to day office-running costs. You can find a full list of HMRC allowable business expenses on the website.

Reduce Corporation Tax

Successful business owners know that the more successful their business, the higher their Corporation Tax liability will be.

There are a number of legal ways that business owners can reduce their Corporation Tax bill. These include making additional pension contributions, making charitable contributions, and investing in research and development.

TLPI specialises in two products – the Small Self-Administered Scheme (SSAS) and the Family Investment Company – which company directors can utilise either on their own, or together as part of a Lifetime Business Tax Plan, to bring down their Corporation Tax bill.

Maintain business liquidity

In order to maintain a successful business and ensure continued growth, flexible cash flow is essential. However, using funds in the various ways outlined above leaves them tied up with no access to them for when you might need them.

The Small Self-Administered Scheme (SSAS) and the Family Investment Company are unique tax planning products, which, whether alone or combined, can help you significantly reduce your Corporation Tax bill without reducing essential cash-flow.

One of the unique features of the SSAS pension is the SSAS Loanback which allows you to loan up to 50% of your pension to your trading company for any business purpose. You can find out more about this feature and all the other ways to reduce Corporation Tax without affecting business liquidity by viewing our Fact File here.

Invest in property

Unlike a traditional pension, the SSAS can invest in property. This means you could use your SSAS to purchase your business premises – an allowable business expense – and then pay rent back into your pension. Not only will this help you reduce your balance sheet, thus reducing your Corporation Tax bill, but it also gives you the control of being your own landlord.

You can find out more about using your pension to invest in property here.

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What our clients say

We have recently used this excellent company to set up a Family Investment Company. The complete process was seamless with our personal contact Jordan Sharpe explaining all the steps along the way in a very confident and professional way. They really do deserve this 5 star review.
Keith Jones
Keith Jones
Tlp have been fantastic with there advice and help in setting up my retirement plans , putting structures into place to help with future generational hand over of assets, great advice from Jordan Sharpe, easy to deal with and always on hand for help when needed, well done all, 👏 ✔️
Stewart Yardley
Stewart Yardley
Trustworthy Financial Advice with an Eye on the Future. I recently sought financial advice, and trust was my top priority. TLP not only met my expectations but exceeded them. Although their product didn't suit my current needs, their dedication to providing comprehensive information and support left me confident in utilising their services in the future. TLP's commitment to customer satisfaction was evident from the moment I approached them. They patiently and thoroughly discussed all available options with me, ensuring I understood the pros and cons of each. Despite not making an immediate sale, they generously shared their time and expertise, demonstrating a genuine interest in helping me make the right decisions. What impressed me the most about TLP was their transparent and honest approach. They didn't try to push any product on me that wouldn't serve my current financial situation. Instead, they focused on empowering me with the knowledge I needed to make informed choices. Their willingness to prioritise my needs over immediate profits spoke volumes about their integrity. I left my interaction with TLP feeling informed, confident, and assured that when the time is right, they will be my go-to financial advisory service. The trust they have established with me through their professionalism, dedication, and genuine care for my financial well-being is unparalleled. I have no hesitation in recommending TLP to anyone seeking trustworthy financial advice.
Robert Sidebottom
Robert Sidebottom
I was looking at setting up a Family Investment Company, during which I’d paid more than a few hundred pounds for a couple of Consultations. After which I’d received some rather expensive quotes for setting it up, as well as getting lots of complexed information about the process. Then I eventually stumbled across TLP while doing some related research. I was pleasantly surprised and more than pleased that they offered a No cost consultation. During which Lewis Jones, was able to simplify all the information and subsequently provide a much more realistic quote for the process. Not to mention the first year’s company accounting services that came for free and the ongoing advice from Lewis. Which has not only been financially beneficial, but as proved to be a great source of knowledge and education, responding to all my questions promptly. With my background not being in the financial and investment sector, his clear explanations put in a context that I was able to understand, has been invaluable.
Geoff Saunders
Geoff Saunders
Great support all the way through the process very professional good knowledge and friendly service. I would highly recommend
Andew Clymo
Andew Clymo
From the start of the transfer to the end TLP have been always available to me, they have kept me informed throughout the process and offered help and guidance when required. Excellent service that is highly recommended
Andy Page
Andy Page
Now fully set up with a Landlords pension and very pleased with the overall service. Only delays were with AVIVA not playing ball but now all done and set to earn significantly more than with AVIVA. Jordan Sharpe was knowledgeable and guided me through the whole process with a professional and friendly approach. Morwena (assistant) was again very friendly and together made the process a simple one. Looking forward to a better retirement (eventually) thanks to TLP.

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