How to improve tax efficiency for your business


As the UK plummets into recession, many businesses are looking at different ways they can improve their efficiency and save money. With challenging times ahead, one of the main ways businesses are looking to save money is by looking at their tax.

If you’re wondering how you can improve your tax efficiency as a business, read on.

  1. Consider changing your tax year-end

All businesses have to pay corporation tax but you can ease the strain on your business by changing your tax year.

It’s normally a good idea to align your tax year with your business’ natural cash flow cycle. This is beneficial as it allows you to plan for your tax payments. For example, if you’re a seasonal business that makes more money in the summer months, it’s often a good idea to change your tax year so that it aligns with these busy periods. This ensures you have the cash available to cover your tax obligations without impacting cash flow.

  1. Tax compliance automation

It’s no secret that taxes can be a headache. That means that there’s always a small risk of a mistake, even for the most robust accounting teams. Automated tax compliance systems can significantly reduce the likelihood of human error in tax calculations and reporting. By getting rid of manual data entry and calculations, it’s far less likely you’ll be making tax blunders. This means you won’t be caught out by over or underpaying your taxes.

  1. Increase cash flow with VAT accounting

If  VAT compliance and accounting are done right, they can make a world of difference to your business. When done by experts, you can improve your cash flow as you can take in the income from VAT and keep it in for a while before you pay it back out. This can help you keep hold of precious cash for a little while longer.

  1. Take advantage of tax relief

Everyone wants small businesses to thrive. That’s why there are plenty of tax relief schemes that you can take advantage of. Some of these include:

  • R&D tax credits: These tax credits are designed to reward businesses for innovation but many businesses either don’t know about these or claim them. If you don’t already claim these, you might be missing out!
  • Patent tax relief: If you routinely create patented inventions, you can look into these tax credits.
  • Employment allowance: You can save up to £3,000 per year if you pay national insurance with this employment allowance.
  • Business rates: This can help you reduce your business rates bill to zero if you have a property that has a value of up to £15,000.

Final thoughts…

As we enter a recession, tax efficiency is crucial if your business is going to survive. By adjusting your tax year, automating your compliance, optimising your VAT and utilising tax relief schemes, you can survive the economic headwinds.