Skip to content
Law Society of Scotland
Search
Find a Solicitor
Contact us
About us
Sign in
Search
Find a Solicitor
Contact us
About us
Sign in
  • For members

    • For members

    • CPD & Training

    • Membership and fees

    • Rules and guidance

    • Regulation and compliance

    • Journal

    • Business support

    • Career growth

    • Member benefits

    • Professional support

    • Lawscot Wellbeing

    • Lawscot Sustainability

  • News and events

    • News and events

    • Law Society news

    • Blogs & opinions

    • CPD & Training

    • Events

  • Qualifying and education

    • Qualifying and education

    • Qualifying as a Scottish solicitor

    • Career support and advice

    • Our work with schools

    • Lawscot Foundation

    • Funding your education

    • Social mobility

  • Research and policy

    • Research and policy

    • Research

    • Influencing the law and policy

    • Equality and diversity

    • Our international work

    • Legal Services Review

    • Meet the Policy team

  • For the public

    • For the public

    • What solicitors can do for you

    • Making a complaint

    • Client protection

    • Find a Solicitor

    • Frequently asked questions

    • Your Scottish solicitor

  • About us

    • About us

    • Contact us

    • Who we are

    • Our strategy, reports and plans

    • Help and advice

    • Our standards

    • Work with us

    • Our logo and branding

    • Equality and diversity

  1. Home
  2. For members
  3. Journal Archive
  4. Issues
  5. December 2016
  6. Tax: is your firm paying over the odds?

Tax: is your firm paying over the odds?

In association with Wesleyan: 10 top tips on how your firm can reduce its tax bill
12th December 2016

The spotlight into the tax affairs of SMEs is shining brighter than ever, as evidenced by HMRC collecting an additional £470 million from small businesses for the year ending 31 March 2015. Understandably, tax season is a particularly anxious time as companies strive to file and pay their bill on time while avoiding penalties. Steve Deutsch, chief executive of Wesleyan Bank, outlines 10 top tips firms can action to reduce future tax liabilities.

1. Review the business structure 


Sole traders working from home should consider setting up a limited company to benefit from lower business rates. This would enable them to pay corporation tax, currently at 20% but which will drop to 17% by 2020, instead of income tax at 20% or 40% for higher rate taxpayers.

2. Operate from home 


Self-employed businesses that spend time working from home can save tax by claiming for a proportion of a variety of home-related costs. These include council tax, insurance, mortgage interest, electricity and heating, water, and landline and telephone bills.

3. Keep it in the family 


Business owners can currently earn £11,100 of tax free income from assets. But by employing their spouse as a director or partner they can distribute the income depending on their personal allowances, and transfer assets or gifts to family members, which is tax free.

4. Use finance to fund major investments 


Businesses should consider using external finance providers when seeking funding for any major capital expenditure projects. Specialist lenders can secure competitive rates and manage each transaction meticulously from start to finish. Companies can also opt to lease the assets rather than signing up to a straight hire purchase deal. Although there is a cost to the debt, it is tax deductible, which can offer short and long-term cash benefits.

5. Leverage the Annual Investment Allowance (AIA) 


The AIA, set to £200,000 from April 2016, allows businesses to write off the costs of certain assets against profits in the year of purchase. This helps to bring quicker tax relief against capital expenditure. Most assets purchased for business use qualify, including IT investments, office equipment and plant and machinery.

6. Consider the flat rate VAT scheme 


This scheme allows businesses to benefit from a single, fixed rate of VAT and apply the percentage to their gross turnover during a quarter and pay this to HMRC. Rates vary depending on a business's industry sector but can offer a welcome boost to cash flow.

7. Claim for expenses 


Organisations can reduce their tax bill by claiming for various company expenditure such as business travel (e.g. mileage), IT equipment and tea and coffee making facilities which can be written off as a business expense.

8. Hire an accountant


Although representing an additional cost, accountants can save significant amounts of time and money by managing a business's financial affairs and alleviating the stress associated with paying tax bills.

9. Introduce tax free benefits 


Offering employee benefits can help to save tax both for a business and its staff. Popular tax free incentives include childcare vouchers, the Cycle to Work scheme which can save up to 25% of the cost of a new bike, workplace parking and meals in a staff canteen.

10. Plan ahead


Businesses should always plan ahead and set aside extra money when tax deadlines approach. But in the event of them being taken by surprise, organisations may wish to consider applying for short-term finance to cover the shortfall instead of having to delve into vital cash reserves.

Steve Deutsch comments: “Tax season is traditionally a stressful time for all organisations, and the pressure on some business owners could intensify as HMRC scrutinise their financial activities more closely. As a result, an increasing number of firms are turning to tax funding as a simple and effective means to pay their tax bills without putting strain on their cash flow.


“Wesleyan Bank offers an extensive range of solutions to enable businesses to spread the cost of their tax bills over six or 12 months, limiting the impact on their day-to-day finances so they can utilise working capital where they really need it.”

For an instant quote to spread the cost of your tax bill, or to apply online, click here

 

Share this article
Add To Favorites
https://lawware.co.uk/

In this issue

  • FAI Rules: a guide to the consultation
  • Saying sorry – is it enough?
  • Repairing obligations for common parts
  • Journal reader survey feedback report
  • Reading for pleasure
  • Tax: is your firm paying over the odds?
  • Opinion: Judith Robertson
  • Book reviews
  • Profile
  • President's column
  • Altered deeds? Mind the rules
  • The clouds gather
  • Turning points: employment law into 2017
  • Policy and the public interest
  • Above the minimum
  • Where code meets custom
  • Child orders: mind the gap
  • EU law, a family affair
  • People on the move
  • Information age?
  • The limits of free web access
  • Tenant farming: the new guidance
  • Insolvency: cross-border clashes
  • Foul play on the agency front
  • Scottish Solicitors' Discipline Tribunal
  • Comm prop and the Holy Grail
  • Leisure – the serious side
  • New anti-money laundering support
  • Law reform roundup
  • Brexit: helping to shape the outcome
  • Transition to Lockton – your questions answered
  • Expertise plus: promoting a sector strength
  • Paralegal pointers
  • Time to look back – and forward
  • Everything comes...
  • Ask Ash

Recent Issues

Dec 2023
Nov 2023
Oct 2023
Sept 2023
Search the archive

Additional

Law Society of Scotland
Atria One, 144 Morrison Street
Edinburgh
EH3 8EX
If you’re looking for a solicitor, visit FindaSolicitor.scot
T: +44(0) 131 226 7411
E: lawscot@lawscot.org.uk
About us
  • Contact us
  • Who we are
  • Strategy reports plans
  • Help and advice
  • Our standards
  • Work with us
Useful links
  • Find a Solicitor
  • Sign in
  • CPD & Training
  • Rules and guidance
  • Website terms and conditions
Law Society of Scotland | © 2025
Made by Gecko Agency Limited