Top 5 Tax-Saving Tips for Small Businesses

Tax efficiency is key to the financial health of any small business. Knowing where you can save legally and strategically can make a real difference to your bottom line. At Brealey & Newbury, small business accountants in Mansfield, we work closely with local business owners to ensure they’re not paying more tax than they need to. Whether you're a sole trader, freelancer, or limited company, these five tips can help you keep more of your hard-earned money.

1. Make the Most of Your Allowances

Every year, HMRC provides tax-free allowances that many small businesses overlook. Some of the most valuable include:

• Annual Investment Allowance (AIA): This allows you to deduct the full value of qualifying assets (such as equipment or machinery) from your profits before tax.

• Dividend Allowance: For company directors, taking part of your income as dividends (up to the annual threshold) can be more tax-efficient than salary.

• Personal Allowance: Ensure you and your spouse make the most of your personal tax-free income thresholds if both of you are involved in the business.

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An experienced business tax specialist can help ensure you’re fully leveraging the allowances available to your situation.

2. Claim for Business Expenses (Including Home Working)

If you're spending money to keep your business running, there's a good chance it can be claimed as a deductible expense. This includes:

• Office supplies and equipment

• Business travel

• Marketing and advertising costs

• Use of home as office

• Phone and internet usage

  
  

Keeping accurate records of these expenses is essential. If you're unsure what qualifies, a Mansfield tax advisor can offer tailored guidance.

3. Consider Salary and Dividend Planning

For owner-managed limited companies, how you pay yourself has tax implications. A mix of salary and dividends can be the most efficient way to draw income. However, this strategy needs to be reviewed annually as tax thresholds and legislation change.

Working with accountants for small businesses ensures you stay compliant while optimising how you take money out of your business.

4. Plan Ahead with Pension Contributions

Paying into a pension isn’t just smart for your future—it’s also a great way to reduce your Corporation Tax bill. Employer pension contributions are a deductible expense, and when planned correctly, they can also reduce personal tax liability for directors.

Not all small business owners realise the benefits of pension planning, but it can be one of the most tax-efficient tools available.

5. Review Your VAT Position

If you’re VAT registered, it’s worth reviewing whether the Flat Rate Scheme or Standard VAT Scheme is better for your business. Some smaller businesses save time and money by using the flat rate method, which simplifies how VAT is calculated.

If you're close to the VAT threshold, speaking to an accountant early can help you plan for the additional admin and cash flow considerations that come with registration.

Work with Trusted Local Experts

At Brealey & Newbury, we’re proud to support local businesses with personalised tax advice and proactive financial planning. As trusted small business accountants in Mansfield, we go beyond number-crunching—we help our clients build stronger, more tax-efficient businesses.

Need help saving on your business tax bill?

Get in touch with Brealey & Newbury, your local small business accountants in Mansfield, for tailored advice, strategic tax planning, and expert support that helps your business thrive. Book a free consultation today and start making your money work smarter.