Tax Saving Tips Every Business Owner Should Know : Crisp Accountancy

Tax Saving Tips Every Business Owner Should Know image

Nobody likes paying more tax than necessary. Yet, every year, thousands of business owners leave money on the table by not taking advantage of tax-saving opportunities.

The good news? With the right strategies, you can legally reduce your tax bill and keep more of your hard-earned profits.

Here are some simple but powerful tax-saving tips to help you pay less and keep more.

1️⃣ Claim All Allowable Expenses

One of the easiest ways to reduce your tax bill is to make sure you’re claiming every legitimate business expense. These must be "wholly and exclusively" for business purposes to qualify for tax relief.

Common deductible expenses include:

✅ Office rent and utilities
✅ Travel costs (fuel, train tickets, accommodation)
✅ Marketing and advertising expenses
✅ Equipment and software subscriptions
✅ Training and professional development

Important:

Keep detailed records and receipts to ensure you don’t miss any claims. If in doubt, check with your accountant!

2️⃣ Take Advantage of R&D Tax Credits

If your business invests in innovation, product development, or problem-solving, you could be eligible for Research & Development (R&D) Tax Credits. This allows you to claim back a portion of your R&D costs, reducing your corporation tax bill.

Common eligible activities include:

🛠️ Developing new products or services
🖥️ Improving existing processes with new technology
🔍 Solving technical challenges in your industry

💡 Did you know?

SMEs can claim up to 33% of their qualifying R&D expenditure back. Many businesses assume they don’t qualify when they actually do—so it’s worth seeking expert advice!

3️⃣ Make the Most of Your Salary & Dividends

If you’re a company director, the way you pay yourself can significantly impact your tax bill. Instead of taking all your income as salary (which is subject to high Income Tax & National Insurance), many directors combine salary and dividends for better tax efficiency.

Example Strategy:

💷 Pay yourself a small salary (within the tax-free personal allowance).
📉 Take the rest as dividends, which are taxed at a lower rate than salary.

⚠️ Key Considerations:

The tax-free dividend allowance for 2024/25 is £500—dividends above this are taxed at different rates depending on your tax band.
National Insurance does not apply to dividends, but corporation tax and personal tax still apply, so structuring this correctly is key.

4️⃣ Use the Annual Investment Allowance (AIA)

Thinking of investing in new equipment, machinery, or business tools? The Annual Investment Allowance (AIA) allows you to deduct the full cost of qualifying purchases from your profits before tax.

This means you get tax relief sooner, rather than spreading it over several years.

💡 What qualifies?

✅ Office equipment (computers, furniture)
✅ Machinery and business vehicles
✅ Certain software and technology

The AIA limit is currently £1 million per year—so make sure you take advantage!

5️⃣ Set Up a Tax-Efficient Pension Plan

Contributing to a pension is one of the most tax-efficient ways to take money out of your business.

✔️ Employer pension contributions are considered a business expense, meaning they reduce your corporation tax bill.
✔️ You personally don’t pay tax on employer contributions (as long as they’re within annual limits).

⚠️ Key Rule:

The pension contributions must be “wholly and exclusively” for the benefit of the business. Speak to an accountant to structure this correctly.

6️⃣ Choose the Right VAT Scheme

If your business is VAT-registered, selecting the right VAT scheme can significantly impact cash flow and profitability.

🔍 Common VAT Schemes:

📌 Flat Rate Scheme – You pay a fixed percentage of turnover instead of reclaiming VAT on expenses. Suitable for some businesses but not all—especially those with high input VAT.
📌 Cash Accounting Scheme – You only pay VAT when customers pay you (rather than when you issue the invoice). This improves cash flow for businesses with late-paying clients.

💡 The VAT registration threshold is currently £90,000—if you exceed this, you must register for VAT.

7️⃣ Plan for Tax Efficiently

Many business owners only think about tax when the bill arrives—but proactive tax planning can save thousands.

Key things to review annually:

✅ Are you using all available allowances?
✅ Could your business structure be more tax-efficient?
✅ Are you missing out on tax reliefs or schemes?

🔹 Proactive planning = lower tax bills! Regular check-ins with an accountant can ensure you optimise your tax position before the financial year ends.

💡 Need help saving tax?

At Crisp Accountancy, we specialise in tax planning and compliance. Our team can help you optimise your tax strategy, maximise allowances, and keep more of your hard-earned profits.

👉 Book a tax review today: Book a Discovery Call : Crisp Accountancy