If you’re a director of a limited company in the UK, managing your tax bill can feel like a constant balancing act.
Between corporation tax, VAT, payroll, and personal taxes, it’s easy to feel like you’re always paying out.
But with the right approach and a bit of planning, you can reduce your tax bill and keep more of your hard-earned money where it belongs in your business.
Here are some practical tips for company directors.
Claim All Allowable Business Expenses
As a director, you can claim allowable business expenses through your company to reduce taxable profits.
This covers everyday running costs like rent, utilities, office supplies, internet, phone bills, travel for business, marketing, advertising, and even salaries and employer’s National Insurance contributions.
These costs are deducted from your company’s income before calculating how much corporation tax you owe.
Keep all receipts and invoices to stay compliant with HMRC.
Make the Most of Capital Allowances
If your company buys assets like equipment, tools, computers, or machinery, you can claim capital allowances to reduce your taxable profits.
This includes the Annual Investment Allowance (AIA), which currently lets you deduct up to £1 million a year on qualifying items.
Cars are treated differently, usually claimed through writing down allowances, which spread the tax relief over several years.
Again, make sure you keep good records and seek advice if you’re not sure what qualifies.
At Legacy Figures Accountancy, we focus on your finances so you can focus on what matters to you and your business.
Want to learn more? Let’s have a chat.
Pay Yourself Efficiently
As a director, how you pay yourself can make a big difference to your tax bill.
Taking a combination of salary and dividends often works out more tax-efficient than salary alone.
Dividends are taxed at different rates from salary and don’t attract National Insurance contributions.
This means you could take home more money while keeping your tax bill lower.
Always make sure dividends are paid from company profits and properly documented.
Contribute to a Pension
Your company can make pension contributions on your behalf, and these payments count as an allowable business expense reducing your corporation tax bill.
They’re also exempt from National Insurance contributions, making pensions a very tax-efficient way to save for your future.
Keep Accurate Records
Good record-keeping is essential for directors.
It ensures you’re claiming all your allowances and expenses, helps you submit accurate tax returns, and avoids costly penalties from HMRC.
Using accounting software or working with a professional bookkeeper makes it easier to stay on top of your numbers.
Final Thoughts: Keep More of What You Earn
Paying tax is part of running a business, but it doesn’t need to feel like a burden.
With careful planning and the right support, you can reduce your tax bill and put more money back into your company.
At Legacy Figures Accountancy, we help directors of limited companies like yours navigate tax with confidence. Get in touch today for a friendly, no-obligation chat about how we can help you keep more of what you earn.
👉 Book a free consultation today.
