Many sole traders often review their business structure and consider whether it’s worth switching to a limited company.

There’s no denying that incorporating a business proved popular in 2017, with Companies House reporting a seven per cent rise in the number of actively trading companies – bringing the UK total to 1.9 million.

Last year’s statistics also showed this trend is no flash in the pan as the number of actively trading companies has increased by around 610,000 since 2010.

If you’re a sole trader who has weighed up the pros and cons and decided to form a limited company, It would be wise at this stage to look into hiring an experienced accountant, who can work with you to potentially reduce your tax liabilities further down the line.

What are the reliefs?

Small businesses can take advantage of the research and development (R&D) scheme, which offers relief on 230 per cent of qualifying R&D costs.

It allows your business to deduct 130 per cent of your qualifying costs from your annual profits on top of the standard 100 per cent deduction.

In certain circumstances, loss-making companies can surrender their losses in return for a payable tax credit worth up to 14.5 per cent of the loss rather than paying corporation tax at 19 per cent.

The patent box enables incorporated companies to reduce their corporation tax rate from 19 per cent to 10 per cent on any qualifying patents or similar intellectual property.

It’s also possible to claim back capital allowances on items, such as any machinery, equipment or vehicles, which are used by your company or any of your staff.

There are various allowances and reliefs to potentially help reduce your corporation tax bill, and we can help you find which ones may be applicable to your company.

You must pay corporation tax before your deadline to avoid any fines and any interest accruing, and the fastest ways to pay are by either paying online, over the phone or through CHAPS.

We can process your corporation tax bill.

Talk to us and see which direction is most suited to you. Phone 01904 438913.

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