Author: Phillips & Co Accountants, Chester
Date: 22 July, 2025
Navigating the world of business tax can be complex. For business owners in our historic city of Chester, staying on top of your tax obligations while maximising your financial efficiency is crucial for sustainable growth.
Mistakes can be costly, not just in penalties from HMRC but in missed opportunities for savings. That’s why having a plan and understanding the key areas of focus is so important. To help you, we’ve put together five essential tax tips.
And remember, you don’t have to manage it all alone. The right team of Accountants in Chester can be your most valuable asset.
1. Choose the Right Business Structure
How your business is structured has significant tax implications. Are you a sole trader, a limited company, or a partnership?
Sole Trader: This is the simplest structure. You and the business are legally one and the same, and you pay income tax on your profits. It’s straightforward, but it offers no liability protection.
Limited Company: A separate legal entity from you. The company pays corporation tax on its profits. You can then draw a salary (subject to PAYE) and/or dividends. This is often more tax-efficient for profitable businesses but comes with more administrative duties.
Choosing the right structure from the outset is vital. As your business grows, it’s worth reviewing this with professional accountants in Chester to ensure it still meets your needs.
2. Claim Every Allowable Expense
One of the most direct ways to reduce your tax bill is to claim for all your legitimate business expenses. However, many business owners miss out simply because they don’t know what they can claim for.
Commonly overlooked expenses include:
Use of Home as Office: A proportion of your household bills (like heating, electricity, and council tax) can be claimed.
Mileage: If you use your personal vehicle for business travel, you can claim a set amount per mile.
Subscriptions and Training: Professional subscriptions and training courses relevant to your business are usually allowable.
Pension Contributions: Company contributions to a director’s pension are a tax-deductible business expense.
Keeping meticulous records is key. Using accounting software can help you track every expense, ensuring you have the evidence needed at year-end.
3. Understand Your VAT Obligations
Once your turnover hits the VAT threshold (£90,000 as of April 2024), you are legally required to register for VAT. However, in some cases, it can be beneficial to register voluntarily before you reach this threshold.
If you sell to other VAT-registered businesses, registering early allows you to reclaim the VAT on your own business costs, which can improve your cash flow. There are also different VAT schemes available (e.g., Cash Accounting, Flat Rate Scheme) that might be more suitable for your business model. This is a complex area where seeking advice is highly recommended.
4. Plan for Your Tax Payments
Few things can cripple a business faster than an unexpected tax bill. Corporation Tax, VAT, and Income Tax payments can be substantial. It is crucial to set money aside throughout the year to cover these liabilities.
A good practice is to open a separate savings account specifically for tax. Every time you receive a payment from a client, transfer a percentage (e.g., 20-25%) into this account. This way, you won’t be caught short when the payment deadline arrives. A good accountant can provide you with forecasts to make this even more accurate.
5. Don’t Be Afraid to Seek Professional Help
While it might seem like an extra cost, hiring a professional can save you a significant amount of money and time in the long run.
A good firm of accountants in Chester will do more than just file your tax return. They will become a trusted partner, offering proactive advice on tax planning, business strategy, and financial efficiency. They can identify opportunities you might have missed and ensure you are fully compliant with the ever-changing tax laws, leaving you free to do what you do best—run your business.
By taking a proactive approach to your finances and seeking expert guidance when needed, you can build a resilient and thriving business right here in Chester.
Disclaimer
The information contained in this blog is for general guidance only. It does not constitute professional advice and should not be relied upon as such. Always seek tailored advice from a qualified accountant regarding your specific circumstances.