Tax Optimisation for Businesses: Key Strategies to Reduce Taxes

• March 17, 2025
• Alejandro Postigo
• no comments

Tax optimisation is essential for any company looking to reduce its tax burden legally and improve profitability. Many businesses end up paying more tax than necessary due to poor planning or a lack of awareness about available tax benefits.

Moreover, at this time of year, the submission of accounting records becomes particularly important. Proper accounting management helps identify tax-saving opportunities and prevents errors that could lead to penalties.

Below, we outline the best strategies for optimising your company’s tax position, the lesser-known benefits you can take advantage of, and the common mistakes to avoid.

1. How to Legally Reduce Taxes

Reducing taxes does not mean tax evasion; it involves taking advantage of deductions, incentives, and legal tax structures. Key strategies include:

Deductible Business Expenses

Ensure that all eligible business expenses are correctly recorded, including:

• Office rent and utilities.
• Company vehicle expenses and business travel.
• Employee training and professional development costs.

Depreciation of Business Assets

Assets purchased for business use (machinery, technology, office furniture, etc.) can be depreciated for tax purposes, reducing the taxable base and lowering the amount of tax owed.

Offsetting Tax Losses

If your company has suffered losses in previous financial years, you can carry them forward to offset future profits, thereby reducing tax liability.

2. Tax Planning and Lesser-Known Benefits

Choosing the Right Tax Structure

Depending on your business activity and revenue, it may be more beneficial to operate as a sole trader, limited company (Ltd), or public limited company (PLC). Each structure has different tax implications, and choosing the right one can result in significant tax savings.

Tax Reliefs and Deductions

There are lesser-known tax incentives that can reduce your overall tax burden:

• R&D Tax Credits: If your company invests in innovation, you may be eligible for tax relief.
• National Insurance Relief: Businesses hiring employees under certain schemes may qualify for reduced employer contributions.
• Investment Allowances: Some sectors benefit from tax relief on the purchase of new assets.

Strategic Tax Residency

Some regions offer lower tax rates and incentives for businesses that establish their fiscal residence there.

3. Submission of Accounting Records: A Key Factor in Tax Optimisation

The accurate submission of accounting records is crucial to any tax strategy. It ensures compliance with tax regulations while allowing businesses to optimise their tax liabilities.

Which Accounting Records Must Be Submitted?

• General Ledger and Journals: Record all financial transactions.
• Balance Sheet and Annual Accounts: Provide an overview of financial health.
• VAT and Invoice Registers: Essential for accurate VAT reporting and compliance.

Common Mistakes to Avoid When Submitting Accounting Records

• Failing to correctly record income and expenses: This can result in penalties or missed deductions.
• Errors in VAT accounting: Incorrect VAT declarations can trigger tax audits.
• Delays in updating accounting records: Tax authorities require records to be submitted within specific deadlines.

Proper accounting record management not only prevents compliance issues but also helps identify tax optimisation opportunities to legally reduce tax payments.

Conclusion: The Importance of Effective Tax Management

Tax optimisation is not just for large corporations; any business can reduce its tax burden through effective planning and by making use of available tax reliefs and deductions.

At MJ Consulting, we help businesses structure their operations, optimise their tax position, and manage the submission of accounting records to ensure they make the most of all available tax-saving opportunities.

Want to legally reduce your taxes? Get in touch with us today to find out how we can help.

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