FACT FILE: Corporation Tax

Successful business owners know the importance of maintain flexible cash flow in order to continue to grow, but we are all also aware that the more successful their business is, the higher the Corporation Tax liability will be… Of course, business owners can reduce Corporation Tax by simply moving it from the company accounts — you could make additional pension contributions, make charitable donations, or spend profits on training or staff rewards (among other options) — but how can you then address the cashflow concern and avoid tying your funds up with no control over them? This is where TLPI can help.

TLPI specialise in two products — the Small Self-Administered Scheme and the Family Investment Company — which, whether alone or combined, can help significantly reduce your Corporation Tax bill without reducing essential cash-flow.

Over 1,000 tax reliefs, benefits, and allowances are available to business owners. By efficiently identifying those suitable and managing allowed business expenses, you can make the most of the reliefs afforded to business owners. One of the unique facilities of the SSAS pension is the SSAS Loanback. this allows you to loan up to 50% of your pension to your trading company, for any valid business purpose. You can set your own interest rate on the loan, as long as it is at least 1% above the high-street base rate. The trick here is to set a higher interest rate, meaning that you payments from the business are increased, further reducing the company balance sheet whilst increasing your pension pot at the same time. In addition, this is the repayment of a business loan and is thus classed as a business expense. The required loan period can be up to five years after which this ‘rinse and repeat’ cycle can be repeated using an increased pot.

Did you know that SSAS pensions, unlike traditional pensions, can invest in property as an option (as well as many other asset classes)? This means, for example, your SSAS could purchase your business premises. Your company would then pay rent to your SSAS, which is considered an allowed business expense, therefore benefitting from further tax relief all whilst lowering your year end balance sheet. Meanwhile, your pension pot continues to grow, giving you a bigger pot from which to make further investments. As an additional benefit, you become your own landlord, reducing expenses and paperwork.

Tax planning can be cost-effective, illuminating, and profitable. However, it is essential to understand the complexities that surround tax planning strategies to ensure you abide by HMRC rules. By employing the correct support, the effectiveness of your tax plan can be elevated with simple steps, all within UK and HMRC regulations. We strongly recommend you book a free consultation with one of our experienced constants, who, in the first instance, will talk through your specific circumstances, aims, and goals and answer any questions you may have. This will allow you to decide whether our tax planning products are right for your situation.