By Adam Caplan, Director  

Corporation Tax mitigation is something we talk about with clients on a regular basis but there are some common misconceptions that keep cropping up.  

For instance, it’s absolutely possible that you’re paying more Corporation Tax than you need to right now.  

It’s entirely possible to reduce it legally, ethically and without risk of committing tax fraud or evasion.  

However, you will need to tread a cautious and careful line so having an accountant help you is always a good move.  

Start by claiming all allowable business expenses 

One of the simplest and most overlooked ways to reduce your Corporation Tax is ensuring you are claiming every allowable business expense. 

Allowable expenses must be wholly and exclusively for business purposes, but that still covers a wide range of costs, including: 

• Office costs, software subscriptions, and professional fees 

• Travel and accommodation for business purposes 

• Marketing, advertising, and website costs 

• Staff costs, including training and benefits 

Poor record keeping often means businesses underclaim.  

However, we often conduct regular reviews with our clients which help to ensure nothing is missed and that their expenses are correctly categorised. 

Similarly to claiming your expenses, you can use Capital Allowances to deduct the cost of qualifying assets from your profits before Corporation Tax is calculated. 

These typically include: 

• Plant and machinery 

• Equipment and tools 

• Fixtures and fittings in commercial premises 

• IT hardware 

Depending on the asset and timing, you may be able to claim 100 per cent relief in the year of purchase.  

Strategic planning around when assets are acquired can significantly reduce your tax bill in a profitable year. 

Review your director remuneration carefully 

How directors are paid can have a material impact on the overall tax position of a company, but balancing salary, dividends, pension contributions, and benefits needs a bit of careful planning.  

While dividends are not deductible for Corporation Tax, salaries and employer pension contributions are so the right mix depends on profitability, cashflow, and personal tax circumstances. 

Employer pension contributions are usually deductible for Corporation Tax purposes and are often one of the most tax-efficient ways to extract profits. 

They can: 

• Reduce taxable profits 

• Build long-term personal wealth 

• Mitigate National Insurance Contributions 

The key is ensuring contributions are made at the right time and are justifiable as part of a remuneration package. 

This is an area where generic advice rarely works so, please don’t go looking to ChatGPT for help.  

Speak to an accountant because tailored planning, specific to your situation, is essential. 

Utilise your losses and time income and expenditure strategically 

Trading losses can often be carried forward or carried back to offset profits in other accounting periods. 

This can be particularly useful for businesses that have had a difficult year followed by a strong recovery.  

Group relief may also be available where there are multiple companies under common control. 

Equally, the timing of income and expenditure can influence when Corporation Tax becomes payable. 

Accelerating allowable costs or deferring income, where commercially appropriate, can reduce the tax bill for a particular accounting period.  

While this does not eliminate tax, it can improve short-term cashflow and provide breathing space for growing businesses. 

This requires careful planning to remain compliant and avoid unintended consequences. 

Get proactive advice rather than reactive fixes 

The most effective Corporation Tax planning happens before the year end, not after accounts are finalised. 

By working with an accountant throughout the year, you can make informed decisions that reduce tax legally while supporting long-term business goals.  

Trying to retrospectively fix a high tax bill often limits the options available to you. 

If you suspect you are paying more Corporation Tax than necessary, why not speak to our Manchester-based accountants? Please get in touch for help.