Reducing Corporation Tax - how ?

[MonkeyWorld]

Just been having a quick review of my last few years accounts and what stood out is that I've been paying out £7.5k - £9.5k each year in corp.tax... made me think that perhaps I ought to be doing more to reduce this amount, by perhaps putting more into my pension ? Obviously no point spending unnecessarily on things the company doesn't really need.

Is there a point at which makes no difference trying to minimise it anymore, and just need to accept it has to be paid ?

[Sockpuppet]

Try making less profit. That is always a good start.

This year looking at £1k in corp tax. See its all about keeping profit low.

[MonkeyWorld]

Try making less profit. That is always a good start.

This year looking at £1k in corp tax. See its all about keeping profit low.

Yes, how though ? I could obviously earn less / take more time off or increase my outgoings - more training courses, more spending on kit, but I don't see the point in spending unnecessarily / or reducing turnover unnecessarily...might as well take the hit on corp.tax....

...guess I'm heading towards my own answer... I need to put more into my pension and find things for the company to buy that benefit me/company that I don't consider unnecessary or unbenificial.

[dude69]

Just been having a quick review of my last few years accounts and what stood out is that I've been paying out £7.5k - £9.5k each year in corp.tax... made me think that perhaps I ought to be doing more to reduce this amount, by perhaps putting more into my pension ? Obviously no point spending unnecessarily on things the company doesn't really need.

Is there a point at which makes no difference trying to minimise it anymore, and just need to accept it has to be paid ?

I paid a lot more than that, it sounds pretty good to me, considering that you'd pay that much tax on about £28k of normal income.

There's no point in spending money unnecessarily, it only amounts to a 20% discount. Pension is the best option.

[Waldorf]

I would steer well away from pensions. Whilst you get some tax relief you are forced to buy an annuity and are dependent on the rates at the time and have no control of your cash.

There are better ways to save for your old age, try an ISA, although there is no tax relief on the capital they will perform at least as well and continue to grow after you have retired and so continue to grow your income.

[VectraMan]

If you pay out all your company's money as salary, you won't have to pay any corporation tax.

[MonkeyWorld]

I'm well aware that some people dislike pensions while others recommend them, personally I'm using combination of both a pension and ISA to save for retirement... the problem with an ISA of course being that I'm taxed at the point I extract the money from the company - whereas the pension comes straight from company funds, albeit will get taxed later in life.

Taking it all out as salary - hmmm, won't that just result in me paying a load of PAYE+N.I on it ? Each to there own, but if I'm not desperate for that cash is it not better for me to just pay the corp.tax and leave it in company for a rainy day/lean year?

Maybe I'm missing something ?

[TheFaQQer]

Taking it all out as salary - hmmm, won't that just result in me paying a load of PAYE+N.I on it ?

Yes.

Typical user - the functional requirements were to devise a method to pay less corporation tax. Paying it all as salary would do that for you.

[MonkeyWorld]

Yes.

Typical user - the functional requirements were to devise a method to pay less corporation tax. Paying it all as salary would do that for you.

True I didn't exactly qualify the question much... ah well at least the answers are helping me to feel better that I'm perhaps not being a total muppet by actually paying a fair chunk of corp.tax....guess all depends what your end goal is.

[glashIFA@Paramount]

I would steer well away from pensions. Whilst you get some tax relief you are forced to buy an annuity and are dependent on the rates at the time and have no control of your cash.

There are better ways to save for your old age, try an ISA, although there is no tax relief on the capital they will perform at least as well and continue to grow after you have retired and so continue to grow your income.

You're no longer forced to buy an annuity since the rules changed in April '06.
You can enter inrto a drawdown ararngement and vary the levels of income you take from the pension fund, and so control to some extent the levelof tax you pay.
Admittedly, the level of income you can drawdown is linked to annuity rates but at least the new arrangements are more flexible than what you used to have to do.