Case Study: How Smart Tax Planning Helped a Small Business Achieve Tax Savings
Reviewing Business Structures for Maximum Tax Savings
Earlier this year, in March, we carried out detailed tax planning for our clients. With the April tax changes coming into effect, it was the perfect opportunity to review business structures and ensure clients were still operating in the most tax-efficient way.
As part of this review, we explored whether moving from a limited company back to a sole trader could create meaningful savings. This option had not been relevant in the past, but the recent increase in Employers’ NIC made it worth considering.
Identifying Opportunities for Small Business Tax Savings
During the review, we identified one client who had downsized over recent years. Their business now has a single director and no employees. Because of these changes, remaining a limited company would have increased their combined tax bill significantly under the new rules.
If the client had stayed as a limited company, their annual combined taxes would have been £10,500. By converting back to a sole trader, the total combined tax dropped to £4,850, resulting in substantial savings. On top of this, the client also benefited from lower accountancy fees, as payroll was no longer required.
Overall, this small business now enjoys over £400 in tax savings each month—a difference that makes a real impact on cash flow and overall business health.
Why Regular Tax Reviews Matter
This case demonstrates the importance of reviewing your business structure regularly. Tax rules, NIC rates, and other regulations change frequently, meaning that a setup that worked well in the past may no longer be the most efficient. A proactive approach to tax savings can lead to significant financial benefits and reduce ongoing accountancy costs.
Thinking About Your Own Business Structure?
If you’re unsure whether your current business structure is still right for you, our team can carry out a review and help identify potential tax savings. A simple check could lead to hundreds of pounds saved each month.