Legal, practical, and genuinely effective, rated by real impact
Most small business owners overpay taxes not because they’re doing anything wrong, but because nobody’s sat down with them and mapped out what they’re entitled to. Let’s change that.
Let me be upfront with you. Tax saving isn’t about being clever or finding loopholes. It’s about claiming everything HMRC says you’re entitled to, doing it properly. The problem is that most small business owners are so busy running their business that the tax planning falls to the bottom of the list until January, when it’s often too late to do anything useful about it.
At SKZ Small Business Accountants, we work with small business owners in Ilford, London and across the UK every week. And the truth is that the gap between what most people pay and what they legally need to pay is often significant. Not because of exotic strategies. Because of the ordinary, straightforward things that were right there and never claimed. This isn’t a generic list. These are the strategies that actually move the needle for small businesses, honestly, by the impact they tend to have.
Think about your last tax bill. Do you actually know whether you claimed every allowable expense, or did you just estimate and hope for the best?
The strategies rated by savings impact
Each card below shows a strategy with an honest savings impact rating (five dots = highest potential impact for most small businesses). Click through your situation and then use the estimator below to see what the combination could mean for your bill.
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Strategy 01 |
Strategy 02 |
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Claim every allowable expense, actually every one Tools, fuel, phone, insurance, software, accountancy fees, home office proportion, professional memberships, training. The “wholly and exclusively” rule is the test, and most businesses under-claim significantly. |
Make pension contributions through your business Employer pension contributions are fully deductible against Corporation Tax or self-employment profits. For owner-managed companies, pension contributions are one of the most tax-efficient ways to extract value, especially with the dividend allowance down to £500 in 2026. |
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Strategy 03 |
Strategy 04 |
Claim the Employment Allowance (£10,500 in 2026/27) Most small businesses can reduce their employer NIC bill by up to £10,500 per year through the Employment Allowance. This has risen to £10,500 for 2026/27 and is genuinely underused, especially by growing businesses who’ve never been told it exists. |
Use the Annual Investment Allowance (up to £1 million) The AIA lets you deduct the full cost of qualifying plant and machinery in the year of purchase, no waiting for annual depreciation. The AIA remains at £1 million. If you’re planning equipment purchases, timing them before year-end can shift a significant deduction into the current tax year. |
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Strategy 05 |
Strategy 06 |
Optimise salary and dividend mix for limited companies Taking a small salary around the NIC secondary threshold (£5,000 in 2026/27) and the rest as dividends reduces both Income Tax and NIC. But with dividend rates rising to 10.75% and 35.75% in 2026/27 and the allowance at just £500, the right balance needs calculating properly; it’s not a one-size-fits-all anymore. |
Time purchases and income before and after year-end Bringing a planned equipment purchase forward from May to March pulls the deduction into the current year. Deferring an invoice until after 5 April moves that income into the next tax year. Bringing forward planned purchases before the tax year end increases your allowable deductions in the current year. Simple in principle, often ignored in practice. |
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Strategy 07 |
Strategy 08 |
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Salary sacrifice for pensions, EVs, and cycle-to-work Salary sacrifice reduces an employee’s gross pay and replaces it with a non-cash benefit: pension contributions, an electric vehicle, or a bike. The employee pays less Income Tax and NIC. You pay less employer NIC. Both sides benefit. For electric vehicles specifically, the 0% benefit-in-kind rate ended, but the 100% First Year Allowance on zero-emission vehicles and EV charging infrastructure remains in place until 2027. Worth building into your fleet planning now. |
Review your VAT scheme annually Flat Rate, Cash Accounting, and Annual Accounting: different VAT schemes suit different businesses, and the right one can mean keeping several thousand pounds of VAT you’d otherwise hand over. Most businesses that joined a scheme years ago have never reviewed whether it still suits their current mix of costs and income. |
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Strategy 09 |
R&D tax relief: more businesses qualify than you’d think Under the merged R&D scheme from April 2024, eligible businesses claim a 20% expenditure credit on qualifying R&D costs. You don’t need to be a tech firm; bespoke software, novel processes, and product development in construction, food, or logistics can all qualify. The R&D merged scheme offers a 20% expenditure credit, with ERIS for qualifying loss-making SMEs. |
Example
A client came to us three years ago. She’d been running a small marketing consultancy as a sole trader since 2019. She’d always done her own Self Assessment. She thought she was on top of it, and she wasn’t doing anything wrong. She just wasn’t doing much that was particularly efficient either.
When we sat down with her numbers, it turned out she’d never claimed her home office costs. She worked from her spare room four days a week. She’d never claimed the business proportion of her phone bill. She’d never claimed her professional membership fees or the training courses she attended annually. She hadn’t made any pension contributions through her business at all, despite having a healthy profit each year. And she hadn’t reviewed whether incorporating would save her money, even though her profit had grown past the point where it would have been genuinely beneficial two years earlier.
In year one of working with us, we implemented five of the strategies on this list. Her tax bill dropped by just over £3,800, and that was without incorporating, which we’re now planning for the following year. She was furious it had taken her so long to get proper advice. Don’t be her.
Estimate your tax saving potential
This is a rough calculator. Your real position depends on the full picture, but it gives a sense of the ballpark.
Sole trader
Annual business profit (before tax)……………………………………………….6000
Business structure …………………………………………………………………….Sole trader
Unclaimed expenses estimate……………………………………………………..5000
Employer NIC bill (if you employ staff)………………………………………….15000
Up to £11,500 potential saving
Tax saving on unclaimed expenses (20%) £1,000
Employment Allowance saving on employer NIC £10,500
Estimated total £11,500
Pension contributions reduce taxable profit at your marginal rate — up to £60,000/year.
Estimates only. Based on 2026/27 rates: Corporation Tax 19–25%, basic rate Income Tax 20%, Employment Allowance £10,500. Always get a personalised view from your accountant before making decisions.
Limited company
Annual business profit (before tax)………………………………………………. 6000
Business structure ……………………………………………………………………..Limited company
Unclaimed expenses estimate………………………………………………………5000
Employer NIC bill (if you employ staff)…………………………………………..15000
Up to £11,450 potential saving
Tax saving on unclaimed expenses (19%) £950
Employment Allowance saving on employer NIC £10,500
Estimated total £11,450
Employer pension contributions are generally deductible for Corporation Tax purposes, subject to the relevant rules, and can reduce a company’s taxable profits.
Estimates only. Based on 2026/27 rates: Corporation Tax at 19% for qualifying profits up to £50,000 and 25% for profits above £250,000, with Marginal Relief generally applying between these thresholds; basic-rate Income Tax at 20%; and Employment Allowance of up to £10,500. Always get a personalised view from your accountant before making tax-planning decisions.
When did you last have a proper tax planning conversation with your accountant, not just a year-end filing, but an actual sit-down strategy review?
The specifics worth knowing
A couple of things have changed this year that affect planning decisions. The dividend allowance remains just £500, and dividend rates rise again in 2026/27, which makes pension contributions comparatively more attractive as a profit extraction route for limited company owners. The basic rate dividend tax is 10.75%, and the higher rate is 35.75%.
Employer NIC is 15% on earnings above the secondary threshold, which dropped to £5,000 in April 2025. That combination makes the Employment Allowance more valuable than ever for small employers; it’s worth up to £10,500, and for teams with modest payrolls it often eliminates the employer NIC bill entirely.
MTD and record-keeping-the quiet tax saver
Here’s what most people miss about Making Tax Digital. When you’re forced to keep digital records and review your numbers quarterly, you start catching expense claims you were missing. You notice mid-year if your tax position is heading somewhere uncomfortable. You have the data to make decisions like bringing a purchase forward before year-end rather than discovering the opportunity after the fact. Good record-keeping isn’t just compliance. It’s the infrastructure that makes every other tax saving strategy actually work.
One more thing mileage
HMRC’s mileage rate for business vehicle use increased by 10p per mile from April 2026, backdated across the year. If you’re claiming mileage for business journeys, update your rate; you may have underclaimed for the whole year. The new rate is 55p per mile for the first 10,000 miles. Not huge individually, but across a year of regular business travel it adds up.
The honest verdict
Tax planning isn’t a once-a-year conversation. It’s a continuous one. The businesses that pay the right amount of tax not more, not less are the ones where the accountant and the owner are in regular dialogue, not just connecting in January with a bag of receipts.
The strategies on this list aren’t obscure. Most of them are straightforward, well-established, and entirely within the rules HMRC publishes. The gap between using them and not using them is almost entirely one of awareness and organisation.
The bottom line
If you haven’t had a proper tax planning review in the last 12 months, you’ve almost certainly overpaid. Not because your accountant is incompetent, but because tax planning only works when it’s done proactively before the year ends, not after. The year-end scramble is the most expensive way to manage your tax affairs.
Pick any three strategies from this post that apply to your business and act on them before 5 April 2027. The mileage rate alone is worth checking today. The pension strategy could save a basic-rate taxpayer thousands in the current year. And if you’ve never had a proper conversation about whether your business structure is still right for your income level, that conversation is overdue. At SKZ Accountants, it’s the kind of review we do regularly, and the results are almost always worth it.
Ready to stop overpaying? Talk to SKZ Accountants.
We’re small business tax specialists in Ilford, working with UK sole traders, limited companies, and growing businesses. Tax planning reviews, salary structure optimisation, Employment Allowance claims, pension planning, and year-round proactive advice.
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