1. Claim every business expense you're allowed

Not sure about the basics? Have a read or watch the video below.

Now make sure you’re claiming everything. It may seem like a hassle to record every £3 bus ticket and £2 pad of paper, but over the course of a year those items add up.

You’ll have industry-specific items to claim too – there are no hard-and-fast rules on what you can’t claim. What might be a clearly-excessive luxury for one business could be a run-of-the-mill necessity for another. Just remember HMRC’s “wholly and exclusively” rule; anything you claim must be entirely for business use.

Some other expenses you may not have considered include pension contributions and professional insurance. Both of these can be paid through your company, rather than by you personally.

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2. Don’t forget to pay yourself a salary

When running a Limited company solo it can sometimes be easy to forget that your business is a separate legal entity – your business’ money isn’t yours! So, to get it into your pockets, you need to pay yourself a salary.

Salaries are business expenses, which reduce your profit and, in turn, your Corporation Tax. So before it’s time to pay tax on your profits, pay yourself!

A word of caution though. Many business owners pay themselves with a mixture of salary and dividends – dividends are drawn from profit, so you need to be able to show you have profits available before issuing dividends. Otherwise, HMRC will most likely reclassify your dividends as salary and you’ll need to pay Income Tax and National Insurance Contributions.

Check out our article to learn how and why to open a business bank account.

3. Go shopping

If you need a new laptop or phone for business use, buying them through your company is the most tax-efficient way to get your new kit.

If you’re in need of a slightly heftier piece of equipment, new premises or other assets, you can take advantage of the Government’s Annual Investment Allowance.

This allowance currently lets businesses write investments in “Plant and Machinery” (things like commercial vehicles, building fixtures and office equipment) for tax purposes. This is set at £1 million permanently.

Let’s say your business has profits of £1 million (you lucky thing). If you spend £400,000 on plant and machinery for your business, currently, the full amount can be subtracted from your profits, reducing them to £600,000. You’d then only pay Corporation Tax on £600,000.

4. Surprise HMRC with an early payment and they’ll owe you interest

That’s right – if you stay on top of your tax affairs and are able to pay your Corporation Tax bill early, HMRC will actually give you some of it back in the form of interest. Find out more in our ‘Benefits of paying Corporation Tax early’ article.

So the big secret to lowering your Corporation Tax is that there is no secret – it just takes diligence, a bit of knowledge of the tax system, and a few minutes every month making sure your business expenses are properly recorded.