FinanceHaines Watts

How can an SME reap the benefits of effective tax planning

The earlier you start thinking about tax planning the better. Jonathan Scott from Haines Watts gives us an insight into why it is key.

How can an SME reap the benefits of effective tax planning

Effective task planning for SME’s is often overlooked. The reason why is business owners are so focused on growing their business, but what they should be looking at is an early tax plan.


Tax doesn’t have to be expensive or complex. It can be very efficient. There’s some little tax tips that we can go through right now. At the moment an investment allowance is a great relief which is underutilized by companies. If a company were to go and pay for say, plant machinery as a manufacturing business they can get a 100% write-off in year one against their profits saving 19 or 17 percent if we are looking at future years.


There is sector specific reliefs the likes of research development which can be used, directors pension planning is also a good area where we can put a large sum into a directors pension pot. There’s no employers NI, there’s no income tax on that, but it is a deduction from corporation tax so it’s a great method of getting money from the company into the owner’s hands if you want to call it that.


Another area is personal tax. Personal tax is an issue for owners. They’re so focused on growing the business they’ll take money out of the business and not realise the income tax problems that that can cause. If we can structure a company with family members and split the shares that means we’ve got a number of basic rate bands to utilise. If we were to say, a child that’s going to university, the worst thing that we can look at as the owner is using their taxed income to pay the university fees. If we structure the business right that child can use their own basic rate band to pay their own university fees.


In the main, what we would say is get the tax advice early, get it right, speak to your advisor, and you will reap the rewards in the long term.

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