Tax mitigation is the conduct which reduces tax liabilities without “tax evasion” for instance, by gifts to charity or investments in certain assets, such as corporate pension schemes, which then qualify for tax relief.

Nobody wants to pay any more tax than they need to. There are simple steps a company owner can take to reduce their Corporation Tax liability. These are acceptable tax mitigation steps and not illegal tax evasion. Some of the main points to consider are:

Company pension contributions

Making pension contributions is one of the most effective pieces of tax-efficient planning a company can undertake. The contributions by a company to a pension scheme are usually fully allowable in calculating the profits chargeable to corporation tax.

Remuneration strategy

It is important that you regularly review how you draw income out of your company. It is worth considering reducing salary to a level where you can still claim state benefits and then maximise the use of dividends. The attraction of paying a dividend is that it does not attract national insurance contributions and the payment of a dividend has no tax consequences for your company.

Claiming Allowances

It is essential that a company claims all available allowances to reduce Corporation Tax. The most common allowances that are either not claimed or only partially claimed are Research and Development Relief and Capital Allowances. It is worth obtaining expert advice on these areas to ensure you receive all the allowances you are entitled to.

The value of an investment 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.

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


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