How to reduce tax?....

[benjamin_c]

I have a few business ideas that i am considering and one thing that always bothers me is the amount of tax payable, VAT Corp tax, then income tax. It just seems like the government wants to rob hard working people left, right and centre…

what ways are there of reducing the tax due while not breaking the law. i hear that some big companies are using tax loopholes but what are these loopholes?

i have looked through the internet and found suggestions such as trying to claim extra expenses through the company, travel costs, and such like. and i read that if the company has an office based aboard then it can avoid uk tax. are these options viable and what are the others? :|

i understand that we are legally obligated to pay tax and i respect that but from a business point of view i would want to maximise my income and profit and not line the pockets of the taxman. :redface:

and i would like to see what the accountants on the forum can add to this, as i imagine their clients are often asking similar things. So what can business owners do to minimise tax?

 

[Tej]

Earn the money first. Then think about saving tax... that would be the order of the day.

No point in doing things arseways is it?

Death and taxes are inevitable

 

[Tej]

( Hoping this could be another mega thread)
The accountants forum never had it so good..

 

[benjamin_c]

lol, it was actually the (LTD VS ST) thread that made me think to write this one, i'm sure what ever info is posted will help the other members, hope there's some interesting debates

 

[accountancyextra]

It's wise to do some planning up front to minimise taxes, rather than being reactive. For example, at the outset consider the legal structure of the business in light of what's in the business plan and who will be working in the business. Too many get this wrong from the off and it can cost them a lot of money.

Having said that, this planning should only be part of the bigger picture, not be the sole focus. Like Tej suggested, I'd concentrate more on how you'll get customers and making sure you've got the pricing and margins correct.

 

[Zeno]

In the region of 99.9% of what you have read on t'interweb (except from here) will be utter drivel.

Discount anything regarding tax loopholes, foreign incorporated offshore companies, quasi charities etc - All unworkable myths perpetuated by cowboys and shysters.

You can limit your tax burdens through proper tax planning (legitimate) but that is really about it.

Examples include:-

1. Careful consideration of the vehicle your business trades through.
2. Planning the purchase of capital assets - plant & machinery etc
3. Pensions & retirement benefits.

 

[benjamin_c]

why do some business men/women move to places like switzerland and monte carlo, to apparantly avoid tax? how does this work if their businesses are uk based?

 

[Tom McClelland]

why do some business men/women move to places like switzerland and monte carlo, to apparantly avoid tax? how does this work if their businesses are uk based?

Options like that are available for the *extremely* wealthy.

Their businesses still pay things like VAT and UK corporation tax if they're trading in the UK.

But as long as they don't visit the UK often they can pay themselves a salary in (eg) Switzerland and pay Swiss taxes on that, which they negotiate with the Canton that they live in.

To make options like this available you need to create the business that is paying you £millions/year *first* and then talk to the Swiss immigration officials.

Really, as others have advised, create the profitable business first. Then contemplate your tax-exile options if you'd like to live somewhere else. Bear in mind that the cost of living in such places can be very high, and many people find them very boring places to live. (I know people who very willingly returned from the low-tax environment in Switzerland to the UK).

 

[An Oasis]

Lots of ways to reduce your tax bill talk to your accountant, little, if any tips are ever given FOC.