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For You & Your Business

Tax Mitigation

Nobody wants to pay any more tax than they need.

Businesses can take simple, legal, measures to reduce their Corporation Tax liability. Some of the main points to consider are:

Company pension contributions

Pension contributions are one of the most effective pieces of tax-efficient planning a business can undertake. Company contributions to a pension scheme are usually fully allowable in calculating the profits chargeable to corporation tax.

Remuneration strategy

It is important to consider how income is drawn out of the business. There may be far more tax-efficient methods. For instance, consider maximising dividends over salary. Dividends do not require national insurance contributions and have no tax consequences for the business.

Claiming allowances

It is important that a company claims all available allowances in order to reduce Corporation Tax. Research and Development Relief and Capital Allowances are two of the most commonly-unclaimed allowances and it is worth obtaining expert advice on these areas, and others, to ensure you receive all the allowances you are entitled to.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

Exit strategy

A well-planned exit strategy is the way to ensure that you maximise your reward for a lifetime of hard work and leave the business well-equipped to move on without you.

Considering your exit means thinking of your finances and your role as leader.

Solid, well-planned management over time will add value to your business, and allow you to make your exit relatively quickly when the time comes.

You will need to concentrate on the following key areas of your business to ensure a smooth exit.

  • Aim for a year-on-year increase in profits to build company value.
  • Ensure your accounts are accurate and up-to-date, giving a true picture of the business. Get ready now for any due diligence that may be required later.
  • Look to expand your range of customers and suppliers – over-reliance on a few key customers will undermine your business’s value.
  • Seek long term commitments from key customers, suppliers, staff and managers.
  • Maximise your relief for Capital Gains Tax (CGT) – you may be able to claim entrepreneurs’ relief which reduces the effective rate of CGT.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

Please note that advice with regard to exit strategy planning may involve the referral to a service that is separate and distinct to those offered by St. James’s Place.

The value of a pension with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.  You may get back less than you invested.

Contact us to discuss your goals or to simply find out more.

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