In today’s dynamic economic environment, tax planning has become an essential part of strategic financial management for limited companies across the UK. With changes to corporation tax rates, evolving tax reliefs, and new government incentives, company directors must stay ahead of the curve to maintain compliance while optimising their tax positions.

As of 1 May 2025, several tax-saving strategies can significantly reduce the burden on UK limited companies, whether you operate in central London or the outer boroughs like Ilford. Whether you’re seeking advice from accountants in London, experienced tax accountants in London, or local experts such as accountants in Ilford, this guide outlines ten strategies to help you make the most of available tax reliefs.

1. Maximise the Merged R&D Tax Relief Scheme

In April 2024, the UK government merged the R&D Expenditure Credit (RDEC) and the SME scheme into a single regime. Under the new structure, companies undertaking qualifying research and development can claim a 20% expenditure credit, taxed as trading income.

If your business is innovative—perhaps developing software, improving manufacturing processes, or conducting technical trials—this relief could significantly reduce your tax bill. For tech startups and SMEs, particularly in London’s growing digital economy, consulting tax accountants in London with R&D expertise is critical to maximise claims and avoid compliance pitfalls.

2. Tax accountants in London look at the Enhanced R&D Intensive Support

For loss-making SMEs, the Enhanced R&D Intensive Support (ERIS) remains one of the most generous reliefs. From 2024, the threshold for eligibility dropped from 40% to 30% of total expenditure spent on R&D.

If eligible, businesses can claim a 186% deduction on qualifying R&D expenses and a payable credit up to 14.5% on the surrenderable loss. Whether you’re a biotech startup in Canary Wharf or a creative tech firm in Ilford, local accountants in Ilford or central specialists can help assess your eligibility and streamline your application.

3. Claim the Patent Box Regime

The Patent Box allows companies to apply a reduced corporation tax rate of 10% to profits earned from patented inventions. If your business holds patents, or exclusively licenses them and has played a role in their development, this regime can reduce your tax burden considerably.

Accountants in London who work with IP-focused companies often advise integrating patent strategies early in the R&D cycle to take full advantage of this relief.

4. Accountants in London look at Leveraging Full Expensing and Capital Allowances

As of 2025, businesses can deduct 100% of qualifying capital expenditure on new plant and machinery under the full expensing scheme. The Annual Investment Allowance (AIA) still allows up to £1 million of qualifying expenditure each year to be fully deducted.

Companies investing in business equipment, especially those expanding operations or modernising assets, should work closely with tax accountants in London to ensure accurate classification and maximise relief.

5. Optimise Salary and Dividends Mix

For director-shareholders, extracting profits through a mix of salary and dividends remains a cornerstone of tax planning. Keeping salary just below the National Insurance threshold and paying the rest as dividends (which attract lower tax rates) helps reduce total tax liabilities.

Proper structuring, however, requires careful compliance. Whether you’re based in East London or Ilford, speaking to accountants Ilford or experienced tax professionals elsewhere in London can ensure HMRC rules are followed.

6. Contribute to Pension Schemes via Salary Sacrifice

Salary sacrifice pension schemes allow employers and employees to reduce National Insurance Contributions. Employees voluntarily reduce their salary in exchange for an equivalent pension contribution.

This strategy is not only tax-efficient but also boosts employee retention. Businesses of all sizes—especially those in competitive job markets like London—can benefit. Tax experts, such as tax accountants London, can help structure and document such schemes effectively.

7. Adopt the Flat Rate VAT Scheme

If your company’s VAT-taxable turnover is £150,000 or less (excluding VAT), the Flat Rate VAT Scheme may offer a simpler and often cheaper way to account for VAT. You pay a fixed percentage of your turnover, based on your business sector, instead of tracking actual VAT on sales and purchases.

Small consultancies, freelancers, and service-based companies often benefit from this scheme, particularly in boroughs like Ilford. A consultation with accountants Ilford can help determine if it suits your business.

8. Make Tax-Deductible Charitable Donations

Donations to UK-registered charities are deductible from your corporation tax bill. Whether it’s in the form of money, property, equipment, or sponsorships, contributions that qualify under HMRC guidelines can offer relief while demonstrating corporate responsibility.

Charities benefit, and so does your bottom line—especially when guided by knowledgeable accountants in London who understand the nuances of allowable deductions.

9. Offer Employee Benefits that Attract Tax Relief

Certain staff benefits—such as employer-provided mobile phones, company bicycles under the Cycle to Work scheme, and approved professional training—can be offered tax-free. By structuring benefit packages efficiently, companies can lower employee turnover while reducing taxable profits.

Speak to tax accountants London to structure benefit schemes that align with your workforce and budget while staying compliant with employment and tax regulations.

10. Structure Your Business for Tax Efficiency

Sometimes, it’s not just what you do—it’s how you’re set up. Structuring your business to include subsidiaries, a holding company, or special purpose vehicles can create tax efficiencies, especially for property, IP, or investment-focused businesses.

This strategy must have a legitimate commercial rationale and meet substance requirements. Engaging experienced professionals—like central accountants in London or specialists in Ilford—can ensure that restructuring efforts are both legal and effective.

Final Thoughts

Every business is different, and tax-saving strategies should be tailored accordingly. Whether you’re a small business in Ilford, a fast-growing fintech firm in Shoreditch, or an established enterprise in Mayfair, working with the right professionals is essential.

Accountants in London bring expertise across diverse industries and tax regimes, while tax accountants London specialise in staying abreast of legislation and HMRC updates. For local insights, accountants Ilford offer personalised service rooted in community experience.

By implementing these ten strategies and collaborating with knowledgeable advisors, limited companies can reduce their tax burden, improve cash flow, and position themselves for sustained growth in 2025 and beyond.