How an entrepreneur can minimise taxes in the UK

How to minimize taxes in Great Britain as an entrepreneur - Legal help

Owners of Limited Liability Companies (PLCs) in the UK are required to pay income tax each year. Fortunately, there are many legal ways to reduce your tax liability. In this article, we have collected the main allowable categories of expenses that will help reduce the taxable base, as well as considered other legal methods of reducing the tax burden on business.

Remuneration not subject to tax

Paying remuneration to owners and managers is one way of reducing the tax burden on a company in the UK.

The main forms of non-taxable remuneration include:

• Salary
• Bonus
• Dividends
• Credits
• Retirement contributions
• Private Investments

Some forms of remuneration or their combination may be more effective for optimizing the tax burden. Seek advice to develop the most effective strategy.

It is important to consider production costs

Under UK law, you can reduce your tax liability on a wide range of expenses that are incurred directly in running your business.

Basic expenses include all expenses related to the implementation of your business:

• Raw materials and materials
• Operating expenses
• Products for resale
• Storage, distribution and logistics
• Marketing and Advertising
• Discounts for distributors, retailers and wholesale buyers

Consider overhead

In addition to basic costs, overheads also reduce the taxable base. Typically, this category includes various costs associated with running your business, such as:

• Salary of employees
• Other employee benefits (such as bonuses or pension contributions)
• Payments to freelancers and third-party contractors
• Rent
• Expenses for maintenance and cleaning of the premises where your commercial activity is carried out
• Insurance contributions
• Office maintenance expenses (eg stationery)
• Legal, accounting and other professional services
• Depreciation
• Travel expenses (such as public transport tickets, car maintenance or tolls)

This list of overheads is not exhaustive; it can also include other costs related to the management, organization and maintenance of your business.

Develop a share distribution program among employees

The program for the distribution of shares (shares) among employees is not only an effective bonus for team development, but also a tool for tax optimization.

Some HMRC approved forms of business participation allow you to reduce your company's tax liability.

How to legally reduce company tax in the UK?

In addition to general ways to reduce the tax burden, the UK government regularly provides temporary benefits and opens various support programs for entrepreneurs.

It is important to choose solutions according to the actual situation and specifics of a specific business, combining different options.

That is why it is important to solve tax issues professionally. Sign up for a tax consultation with the company's specialist. We will examine your situation in detail and offer optimal solutions for tax optimization of your company.

What can be taken into account to reduce taxes?

There are two main categories of expenses for tax deductions in the UK: expenses that are tax deductible, such as advertising, travel and service expenses, and expenses that do not reduce the taxable base, such as entertainment expenses for customers. Expenses can be classified into categories such as goods, services, utilities and membership fees.

It is important to follow HMRC principles: expenses must be necessary for the business and used exclusively for the business. Personal expenses such as shopping for clothes or dry cleaning are usually not deductible and including them can lead to an HMRC audit and fines. For expenses used for both business and personal use, a pro rata share of the expenses should be taken into account, based on HMRC guidance.

Legal support for reducing taxes in Great Britain

Legal assistance in reducing taxes in Great Britain is important for effective optimization of the company's tax obligations. Legal analysis helps identify legitimate ways to reduce the tax burden, such as the use of tax deductions and benefits. Legal analysis of the situation allows you to develop a strategy to optimize costs and manage tax risks, ensuring compliance with all current HMRC rules and regulations. A legal audit of the situation includes an analysis of expenses to determine which of them can be deducted and the preparation of the necessary documents for filing tax returns. The presence of an experienced legal consultant who conducts a legal audit will help to avoid mistakes and misunderstandings that can lead to fines or additional audits by tax authorities.