Reducing corporation tax legitimately means claiming reliefs the company is entitled to and has not claimed. It is not a matter of structuring, and for the overwhelming majority of owner-managed companies the whole of the available saving is sitting in four reliefs, at least one of which is usually unclaimed.
Capital allowances, almost always the largest
The annual investment allowance relieves up to £1 million of qualifying plant and machinery in full. Most companies claim it on obvious equipment and miss the rest: software, fixtures in premises they own or have fitted out, the integral features inside a commercial building. A company that has bought or refurbished premises and never had a capital allowances review is the clearest case of an unclaimed relief, because the amounts are large and the claim survives being made late.
R&D relief, where the work qualifies
If the company resolved a genuine technological uncertainty, relief is available on the staff time, consumables, software and cloud costs attributable to it. The narrowing is severe and the compliance is now heavy, but for a company doing real development the number is significant. It is also the one relief where the cost of claiming is worth comparing, which is why this site keeps a record of what the firms charge: three of ten publish a fee, from 5% to 15% of the benefit.
Losses, pensions, and the reliefs people forget
Trading losses can be carried back a year, or forward, and using them in the right order matters when the company moves between rate bands. Employer pension contributions are deductible in the period paid, which makes the timing of a contribution a real decision at a year end. Qualifying charitable donations by the company are deductible. Patent box gives 10% on patented profits. None of these is a scheme; all of them are in the legislation and all of them are commonly left on the table.
Questions people ask about how to reduce corporation tax
What is the best way to reduce corporation tax?
Claim the reliefs the company is entitled to. Capital allowances are usually the largest and the most commonly underclaimed, particularly the integral features inside premises the company owns or has fitted out.
Do pension contributions reduce corporation tax?
Employer contributions are deductible in the accounting period they are paid, which makes the timing of a contribution around a year end a genuine decision.
Is there anything to do about the rate itself?
Only through the thresholds. The £50,000 and £250,000 limits are divided by the number of associated companies, so an incorrect associated companies count can put a company in the wrong band.