Ways to reduce your corporation tax bill

Corporation Tax

With the corporation tax rate rising from 19% to 25%, business owners have started to face higher corporation tax bills from 1 April 2023. So, what are the ways to reduce your corporation tax bill?

If you are running a profitable business, you may be wondering if you’re taking advantage of all the tax efficiencies available.

Although we understand no one enjoys writing a large cheque to HMRC each year, corporation tax is the result of generating taxable profits. And taxable profits mean your company is doing well and succeeding!

Here are some easy and simple ways to help reduce your corporation tax bill.


Claim every business expense you’re allowed!

Yes, we know what you are thinking, it does seem obvious! However, ensuring you are claiming all the allowable expenses you can, is crucial in helping to reduce your corporation tax bill.

Businesses often overlook some simple expenses from their accounting records.

Below are a few expenses you can include in your accounts to help reduce your taxable profits.


  • Mileage

Where employees and directors use their own personal vehicle for business trips, they can claim up to 10,000 miles per year at a rate of 45p per mile. For any mileage over this limit, the rate drops to 25p per mile.

You can reimburse employees for these costs and claim them as allowable expenses to reduce corporation tax.


  • Use of home as office

Many small businesses and start-up companies working from home, can reduce their corporation tax by claiming home office expenses.

You can claim a weekly allowance of £6 (£312 per year for 23/24). The full HMRC guidance can be found  here


  • Trivial benefits

A trivial benefit is a token of appreciation up to £50 each time, which you can claim corporation tax relief on. Directors have an annual cap for trivial benefits of £300 a year.


Please remember, expenses must be wholly and exclusively for the purpose of your business to be tax deductible.


Make pension contributions

One effective way to reduce your company’s corporation tax is by making pension contributions.

When a company makes contributions to a pension scheme for its directors or employees, these contributions are deductible from the company’s profits when paid.

As well as reducing the company’s tax, it is also a tax-efficient way to save for your retirement.  You are not drawing out money from your business and then paying into a pension scheme.  Paying through the company in the first place is what delivers the efficiency.

Please remember to speak to us first before you make a one-off contribution, so we can check the amount you are contributing does not harm your personal tax circumstances.


Invest in plant and machinery

For most qualifying plant and machinery, companies can claim a deduction of 100% of the costs of the assets, thanks to the Annual Investment Allowance (AIA).  In fact the 2023 Autumn Statement introduced a permanent “full expensing” of capital expenditure for most businesses.

How about some simple low cost items that you should consider which will deliver 100% tax relief? Items like:

  • Laptops
  • A second computer screen (we couldn’t live without them!)
  • Mobile phone
  • Desks and chairs for your office

If your company has the means to invest in purchasing another machine, not only will the business’ productivity increase, but the cost of the asset will also reduce your corporation tax liability.

Vans also qualify. So if you were thinking of increasing your fleet then this is a purchase you might want to think about bringing forward?



Company cars have a reputation for not being very tax-efficient. Whilst this is true, fully electric cars are the most tax advantageous of the lot, which could help save your company tax whilst also helping to save the planet!

When a new electric car is taken out on a rental lease hire, your monthly payments attract 100% tax relief.

If the company purchases a new electric car outright it will attract 100% tax relief on the entire cost of the vehicle by claiming 100% first year allowances.

There are tax consequences on your personal tax but nothing punitive.

Here are our thoughts on how an electric car can be good for your business.


Spend, spend, spend!

If your company is generating profits and has a healthy cash balance, why not look at areas within your company that might need a bit of investment?

Is your company website desperate for an update? Outsourcing the updating of your website regularly will not only help to boost your online presence, but the cost of doing so will reduce your taxable profits.

Is there a particular training course you have been considering? Paying for a course related to your business will not only benefit the company, but the cost of the course is tax deductible.

You can also spend money on outsourcing activities that you do not enjoy! This will allow you to focus on what’s most important to you and your business. Do you spend hours doing your own bookkeeping? You can outsource this and save yourself time (and a headache)! The cost of the bookkeeping will reduce your taxable profits.

Please get in touch with us if this is something you are interested in! We are experts in cloud technology and bookkeeping.  You should email your manager at Myers Clark.

You may be a business that is spending money on Research and Development.  If you are, you may be entitled to tax relief. You can find out more about this and whether you qualify here


Paying corporation tax doesn’t need to be painful if you are prepared and plan for it.


If you have any questions on this topic, please email your normal manager. If you are not yet working with us, you can email Priya at priyar@myersclark.co.uk who will be happy to help you.