It’s no secret that planning is the key to success when it comes to operating your business, and tax planning is no different.
It’s easy to fall into a cycle of perceiving tax as a matter of simply satisfying your obligations each time the deadlines come round. With some effective planning, however, you may be able to make significant savings that benefit your business – and your pocket – in the long run.
Tailored to the unique needs of your business, our Tax Planning services are designed to help you navigate tax compliance efficiently, so that you can focus on delivering high-quality eye care services whilst growing your business.
What is Tax Planning?
Tax planning involves a thorough analysis of your business’s financial situation or strategy to ensure that all aspects of your operations come together to minimise your tax liabilities. The goal is to optimise your tax position, ultimately resulting in a reduced tax bill.
As part of our comprehensive tax planning service, we work with you to explore the following options that could decrease the tax liability of your optometry practice:
Decide on a tax-efficient structure for your business
The structure of your business may have an adverse effect on your tax liability. If you’re set up as a sole trader or partnership, then you will be subject to personal income tax on the profits earned by the business (this is split between partners in partnerships). Alternatively, if you’re set up as a limited company, your business will be subject to corporation tax. Each structure may benefit different situations – our in-depth analysis of your business’ financial situation will provide clarity on which structure could be more tax-efficient for you.
Make use of the reliefs and allowances available
There are a multitude of tax relief and allowance schemes, each designed to encourage investment for UK business owners.
Capital allowances are a type of business tax relief that allow you to deduct some or all of the value of an item, known as plant and machinery (equipment, machinery, business vehicles) from your profits before paying tax.
There are four capital allowances for plant and machinery:
- Annual investment allowance (AIA) – allows you to claim up to £1 million on certain plant and machinery
- 100% first year allowances – allows you to claim the full amount for certain plant and machinery in the year that it was bought
- Super-deduction or 50% special rate first year allowance – this can be claimed for certain plant and machinery bought from 1st April 2021 up to and including 31st March 2023
- Writing down allowances – these allow you to claim for plant and machinery that does not qualify for AIA or if you’ve already claimed for the maximum amount.
Business expenses can also be claimed for certain costs, including; day-to-day running costs; items that you buy and sell as your trade; interest payments or finance costs for buying assets. The ongoing franchise fees that you pay monthly, quarterly, or annually are also tax-deductible as a revenue expense.
We will work alongside you to understand and access the capital allowances and expenses that you’re eligible to claim for.
If you’re looking at having a re-fit scheduled, it would be recommended to try and have this in place before the business year end. Timing the refit within your accounting period will allow us to review the works, ensuring that you can claim the most allowances to offset against your taxable profits – ultimately bringing your corporation tax bill down!
Choose a method of profit extraction
There are a few different ways to extract profit from your business, and each has different tax implications. Whether you choose to pay yourself a salary (subject to PAYE income tax and NICs), take dividends from profit, or make pension contributions. Given the changing nature of the UK’s tax landscape, the efficiency of different methods of profit extraction may change – we’ll help you to stay informed and plan for any changes.
These are just three examples of how we can work alongside you to achieve significant savings on your tax bill. To find out more about these and other strategies included in our Tax Planning services, please don’t hesitate to get in touch with a member of the team on
01942 816512 or via email:
Chris Barlow, Tax Manager: [email protected]
This blog contains public sector information licensed under the Open Government Licence v1.0.
