Episode Transcript
[00:00:00] Excuses. Here I am. So.
[00:00:06] Hi, guys, and welcome to this webinar. I'm Stephen Edwards. I'm a chartered certified accountant, founder of Grow Profit First Accountants. I've been in the industry for over 20 years, been running my own business for over 13 years, and we've looked after hundreds and hundreds of business owners with their tax, having them grow and scale their business. But today is about the 33 Ways to Save tax, or what we call as a tax MOT or a tax diagnostic, quite simply. And I'm a business owner myself, not just an accountant. I'm an entrepreneur and a business owner, just like you. Quite simply, the accountants out there are kind of just ticking the boxes. And we've realized, particularly over the last five years, that most business owners are just paying too much tax.
[00:00:54] You think you've got an accountant and they're ticking all the boxes and they're doing the right thing, but quite frankly, they're not going deep enough to save you enough money. They're not really getting under the skin, getting under the bonnet to figure out how can they really save you tax. So today you are going to learn the at least 33 ways. There's 33 main ways, but actually a couple of bonus ones. You're going to look at how you can go away and potentially at the end of this session, walk away with a blueprint to save yourself thousands of pounds in tax. And why am I doing this? Why am I sharing all this value? Because quite frankly, not everybody can do it themselves. You might watch this and say, this is brilliant. I'm going to go speak to my accountant. I'm going to go do it myself. Some of you will say, this is not for me. Steve Grow, can you guys help us? But I'm going to give you all the, all the knowledge, the blueprint, and it's up to you to make that decision, how you're going to make these tax savings in your business. So let's kick things off. We're talking about a tax diagnostic review or a tax mot. So it's a bit like, I like the term diagnostic because when you plug your car into the garage when you've got a problem, it comes off all these error codes and all these, like, folks or what's wrong, what's optimized, not what's not right. And that's how we think of it for your business and your tax. But when I say your business, it's not just your business, it's your personal situation, it's your family. Why do we want to Save tax. We want to save tax so you can take more money out of your business to invest in property, to go on holiday, to have less financial stress and overwhelm, to help your children, help your parents, whatever it means for you. So just give you a little bit of a flavor for what's at stake. When we're looking at these kind of tax reviews and these tax opportunities, typically when we do the review for someone and we look at these 33 main ways to save tax and we go a little bit deeper, we save at least 4,000 pounds in tax. Some of the ones we've done more recently, the last half dozen reviews we've done have been between 5,000 pounds of tax savings. The 50,000 pounds is the highest we've ever identified and that was for a husband and wife business. Now I'll get more on that later. If you carry on watching. When we go into the 33 ways, I'll share with you. How did we actually save that husband and wife £50,000 in tax? I'll give away the kind of magic behind the scenes with that one. Okay, perfect. So how does it. This is not what today's about. So I'm not going to go into this, but if at the end you don't want to do it yourself, you've. I'm going to show you the 33 ways to save tax. If you don't want to do it yourself and you want us to help you, this is what the kind of process looks like. But what I want to start on is I want to talk about the three main areas of tax and why your accountant or your bookkeeper is kind of letting you down. You've got the standard tax, you've got the end of year accounts, you've got submitting your personal tax, you've got submitting your PAYE on time, your vat, all of those things. That's just what I call the standard tax and that's compliance. Compliance is doing the stuff we have to do. We've got no choice. We've got to submit everything on time. Number two is going a bit deeper. That's doing a deep dive review and that's what I'm going to show you how to do. I want to give you the tools and of what do you need to go deeper on and I'll show you the 33 main areas once you've gone deeper. And you don't need to do that every single year. The sort of tax review I'm talking about today, you don't need to do every 12 months. Because as you'll see in a minute, your business goes through this growth journey. It starts out, it grows, perhaps you're going to sell it one day. So there's different stages in the lifetime of your business. But what you do need, number three, is a little bit of anot. You know, if only I'd done this, I could have saved £2,000. You don't want to be saying that statement. You want to know every year if you're making big decisions, you're buying equipment or you're applying for a mortgage, that your accountant or at least yourself as a business owner, you're clued up, you're doing all the right things and that's where Theot comes in. So think of the deep dive as a really big service every now and again, maybe a 60,000 mile service and the annual thing is just the MOT. You just need to be keeping on top of these things. So that's how we think of tax. There can be some more specialist areas when it comes to tax because you can get experts in vat, experts in R and D and all these different things. So just really, I want to give you this background. If you're watching this saying, Steve, give me all the good stuff, just tell me how can I save tax? By the way, I've talked, I talk a lot about this on TikTok. Steve Edwards accountant that's all I talk about really is tax savings. I will get there, I promise. But I want to lay down the foundation, I want to lay down the context as to why do you need this kind of deeper tax review in your business. Because all of the 33 ways doesn't apply all the time. It depends on your circumstances. So when you're just starting your business, quite typically you're going to need to get the right dividends in place, the right share structure. How much do you expect to take as a dividend? The right salary, how much do you expect to reward yourself? You should your partner be in the business? Should you be a limited company, should you be a sole trader, should you be a partnership? Can your children be involved in the business? Do you need to register for VAT paye? What sort of bookkeeping system do you need? All of those are the things you're thinking of. Then you grow. And we are typically in my accountancy firm dealing with businesses that have gone beyond that startup phase and they're growing, typically 100k plus in revenue. You're kind of growing and, and you're VAT registered and it's should I be a limited company, typically, not always the case. That's when you, when you become VAT registered, you're thinking about, should I be a limited company? Have I got the right share structure? But the point of this is things change when you start your business and then a few years later, if you're doing 100k, 200k in revenue, things have changed. So your tax strategy needs to be different later on. You might be, you might have leveled out as a lifestyle business. You know what you earn, your business is a bit more mature again. It's a very different situation from starting out and growing, scaling. You want to go from one shop to five shops, completely different situation. How are we going to fund that? Do we need to bring other shareholders in the business and all those sort of things? And if you're selling the business later on, so hopefully that gives you a, a little bit of context and, and that just goes into a little bit more detail. Some of the things to think about now, the good stuff. Okay, so we're eight minutes in and this is probably what you want to know about. So how am I going to do this? It's all on this page. You can take a screenshot, you'll, you can, you can download this, you will get access to this PDF to review @ own leisure. So let me just first let you know that knowledge in itself is worthless. Okay? So just want to lay down that foundation because we've got all the knowledge in the world on the Internet now, on YouTube, Google Chat, GPT. We can all figure out how to build our own house, you know, repair our own cars and service our own cars. But most of us don't do it because it's not our skill set. So there might be some things here where they're so easy to do. You're like, I can go and do that tomorrow. And that's what I want for you. I want you to go away with things you can literally do tomorrow, today, next week and get some real savings. There's other things which might need a deeper dive and that's where we come in, which I'll talk about in a second. So I'm not going to go into every single one in detail detail because they're all here. So I'm showing you all of the tax saving opportunities or the main tax saving opportunities. But what I will do, I'll talk about the, the client where we saved them £50,000 in tax savings. I'll also talk about some examples of where we've saved people tax. I'll give Some real world examples of the sort of things that we feel, wow. We know because we've implemented it and we've guided people, we've given that advice. Save them tax. I'll just talk about some of the main ones and for the, the detail orientated person watching this, maybe another accountant being a little bit nosy, learning what we're doing. If you add it all up, there's actually more than 33 ways. But when we break it down internally, there's 33 main ways to save tax.
[00:09:11] The kind of main ones are around the circle on the left hand side and I'm just going to spend my time talking about those and touching upon some of the other opportunities you have. So first and foremost we've got the basic stuff that is very common when you start your business, which is your salary, your salary and also your dividends. So that typically those things go hand in hand.
[00:09:33] How do you reward yourself? And dividends are at the bottom. How do you reward yourself as the owner employee within your business? And most people might think that's just really simple and we, we put a salary through and we stick with it. Actually no, it is changing quite a lot at the moment. So you know, there might be a lower amount, something like £5,000. There might be amount, an amount closer to the NI limit of 9k or an amount closer to the personal tax limit of over 12k. That suits your circumstances. And it depends on a few different things. It depends on do you have ever income, do you have a partner, is there one person in the business, two people in the business, you know what your plans in the next five months? There's a few different things there. So if you haven't reviewed your salary and is it the right salary for me and my business in the last few years, that's probably number one. You need to make sure you do that because it might just be that you are overpaying tax by a few hundred pounds. But if you are a higher rate taxpayer, it could be even more, it could be double that amount. And as we're seeing a minute, all of these savings accumulate and that's where we get to the bigger figures of a few thousand pounds. If your accountant does your payroll for you and they do your personal tax and they do your limited company account, they should be doing this for you. For our clients, we do this every single year. We do it behind the scenes, we review people's circumstances and we run with the most tax efficient salary for them. But that's something to think about, right? This one Here, I really do not want you to just overlook this because it's boring, but it's powerful and actually it's probably great business advice. The boring things are often the most important things in our business. Not the shiny new object, the exciting thing we've never heard of. And I'm not here to debate, you know, the whether it's the best kind of investment for you in terms of putting into a pension, because I'm not a financial advisor, but what I can tell you is, is from a business perspective, putting into your pension, particularly if you are higher rate taxpayer, is one of the most powerful things you can do, is transformative. So you know, if you're a high rate taxpayer and you're taking all of your money out, and I get it, we all have a life, we all have lifestyle, creep of expenses, we have commitments, we're in our business to be able to pay ourselves. But a little tweak to how much you pay yourself versus what you could be gaining in tax in your pension pot is incredible. So if you're a high rate taxpayer, and I'm going to really oversimplify and round these numbers, if you've got £10,000 in your business of profit, you've got a lot more. Let's pretend you've got 100. But if we just separate £10,000 and say do I take out an extra 10,000 or do I leave 10,000 in to put into my pension? So for you to take that £10,000 out, by the time you've paid corporation tax, by the time you've paid tax on your dividend, to take it out of your business, you're going to be lucky to end up with £5,000, probably going to end up with less than £5,000. So let's say £5,000 is what you're left with from 10K. However, if you put that into your pension pot, if you put £10,000 into your pension part, you're actually going to save £2,000 in corporation tax straight away. So you actually it becomes an expense because when you take a dividend out of your business, it's not tax deductible, but when you pay towards your pension, it is tax deductible. So that £10,000 actually going to save you £2,000 in corporation tax by taking as a pension.
[00:13:00] So you're already £2,000 better off. Well, you're actually £7,000 better off because we started with 5, if you remember, if you take it out versus keeping the 10 because you still got the 10 plus you're saving £2,000 in corporation tax, so it's now kind of worth £12,000. So that's a £7,000 extra amount in your wealth. And we really focus on wealth creation for our clients over time.
[00:13:26] But there's more to it because if you leave that in your pension pot for, let's say 10 or 20 years, it could be worth 30, 40, 50,000 pounds. So, and it depends on your age, it depends on your circumstances.
[00:13:38] But even if you, it just goes from 5 to 12, if that, if you follow me at the beginning, you might want to rewind that. You've just made a 7,000 pound extra cash and wealth for you and your family by pretty much doing nothing. By not taking that money out, you're losing 5 to gain 12, you're getting 10 in your pot and you're getting 2 in tax savings to reduce your corporation tax. But yeah, to lose £5,000, if you leave it in your pension pot for years and years and years, it could be worth 40, £50,000, which is incredible. It's the power of compounding. So we're talking about the power of, of tax efficiency with pensions and compounding. I'm not here to sour you on whether you should have a pension or not, but I can promise you it's one of the most powerful things you can do. It's, it's one of the main things we will focus on as well as all the other areas. So let's touch upon some of the other things. It, it says personal use of cars, but I'm going to dive into a company car, I'm going to go in that direction.
[00:14:35] Employee benefits.
[00:14:37] It's quite a big area and there's some boxes there that goes into a little bit more detail of how you can maximize employee benefits. Company car. So in my own business, if I tell you a story, I didn't have a company car for years and years and years and years. And someone in the family who's a little bit older than me, he, he would say, Steve, why don't you have a company car? And he'd ask me about three or four times. Every time there was a, there was a get together in our family and I'd say, how many, how many times do I need to say it's not tax efficient? I don't have a company car because it's not tax efficient. But that's changed. If you go down the electric car route or you go down the hybrid route, it is. And it could be super tax efficient for you in your circumstances. And you know, you could be saving up to around 40%, potentially off the monthly, let's say lease price. So if you've got car that's costing £500 per month, it's going to actually, at the end of everything, be more like 200 pounds per month, depending on your circumstances, if you're VAT registered, if you're a basic rate taxpayer or high rate taxpayer. But it needs to be looked at, it needs to be reviewed. You know, you need to look at how you currently fund in your car through your family. And that gets to the point of what I'm talking about today, guys, as business owners. I'm a business owner, you're a business owner. I'm not just an accountant. Yes, my, my business is accountancy and business coaching and we, we go deep on profit first. How can you make more money? And we save you tax. However, I'm a business owner like you and I want to maximize how my business and you should as well, supports my lifestyle. And that's what we're talking about with company cars. That's an area you can focus on. We've got rent there, so if you've got property, we can get a little bit creative in terms of how it interacts with, you know, if it's commercial property, you could potentially rent it yourself. But generally, what my mind goes to when we talk about rent, we're talking about claiming for working from home. And there's actually three main ways to claim for working from home. And it gets a bit catered. Some people either go a little bit too prudent, too careful, they don't claim enough. Other people, particularly when they do it themselves, they might get too aggressive and claim too much. We want to be able to sleep at night, we want to make sure everything we're doing is a bit bored. But we want to use our experience of what we can get away with, but it's legally get away with in a practical perspective. So there's a sweet spot when it comes to working from home. What can you claim for working from home? And we've got a template. Reach out to us if you want that template to help you figure out how to maximize what you can claim for working from home. At the top there in the pink box, we've got homework and expenses. So, you know, we can cover that on a phone call if you want to have a chat with us following this, this webinar. But we've also got the template for you if that's what you want. Right now, mileage claims. If you haven't got a company car, you've got your own car, you can claim a mileage rate against your business. Are you claiming the right amount of. Are you claiming for all those little trips you don't think about so. Or can you turn a personal trip into a business trip? So let's say you want to wanted to pop out to get yourself a little bit of lunch from Marks and Spencer's or whatever it is you're working from home. But you could turn onto a business trip by saying I'm going to pop out, I'm going to go and get some stationery, I'm going to top up the ink, I'm going to get some paper for the printer, I'm going to get some bits and bobs that are business related expenses. It's then become a business trip so we can get a little bit creative. And you can imagine if you're going for longer distances, you're going to London, you're going to Birmingham. You know, I do it where I tie in work things with personal things and then part of it becomes a work trip and then it opens up a whole new side of things in terms of travel expenses, stunts and entertaining. Feeding yourself as a director, when can you claim a meal out? Are you maximizing the opportunity you have to claim meals through your business with without taking the mickey, it's all about being proportional and knowing what is the strategy. Have you had to chat with your accountant? What is your strategy? When is it allowable, when is it not allowable. And that's one of the big areas we actually talk to people about as well. So because of time I don't want to keep you for, you know, for ages and ages. We're around 20 minutes. There can also be loans. So you can, you can draw a loan out your business less than £10,000 and you don't have to pay a benefit in kind. But you also need to think about director's loan account provision. But there are some opportunities around loans also. If you've loaned money to the business, if you put money into your business, you can pay yourself interest completely tax free from your business. And there's some other things there. We've got lunches and snacks. So if it's available to your team as well as yourself, it's tax free. You don't need to worry about it. It can be claimed through the business. Things like on site gyms, we talked about company cars and there's a few other bits there but give you the story. The 50,000 pound tax saving, you might be watching, thinking, Steve, that's all I care about, how do you save that person £50,000? So first and foremost, they've had loads of accountants in the past, but no one's gave them a deep review. No one's. But the truth is things changed, their circumstances changed and the business was a fairly simple business on the face of it. It was husband and wife, it was quite high earning business, high profits. We're talking multiple six figure numbers in terms of profits. It's quite high, hence the high tax saving. But you know, when I talk about the five to ten thousand pounds worth of tax savings, you don't need to be huge, you could be K200, 200, 300K business, sometimes even smaller, but in this case it was a small business but they had quite a high profit and no one looked at their family situation for some time. So we've done a tax diagnostic, we've done a tax diagnostic review which I'm going to talk about in a second, how that works. We went deep in everything. We understood exactly what their plans are for the next 10, 20 years. How old are the children, how old are their, you know, their parents now, how old are their, their siblings? So we learned every nook and cranny about the family situation and we realized in the next 12 months there's an opportunity, bring the children in the business and you can do this either as a salary or as a shareholder, but it, you can't just, you know, add their name onto company's house or add them on a tax return. It's not as simple as that. There needs to be strategic, it needs to be justifiable with hmrc you need to do it the right way. So initially we added them on as a sal salary. We needed to review what is allowable, what could they do in the business, what could they justify in terms of the input the children are doing in the business? Could it be delivering flyers, could it be social media, could it be admin, could it be research and AI and chat GPT?
[00:21:06] So there was an amount for salary and then when they reached a certain age, we also made them a shareholder in the business. The tax savings over three years was around 50,000 pounds. But there's some more recent situations where it's been around £8,000 and it's not been big changes like that. It's been a combination of the things you can see on this page that I've talked about. So hopefully that gives you something to think about. Guys, so you've got Three options today. You can, you can go away and do this yourself, that's perfectly fine. And actually, you could also go and speak to your current accountant. I haven't got that on there, but I. What I would say is, should you be the one bringing this to your current accountant? It's a bit worrying, if you ask me, if you are the one bringing this to your current accountant, because do they really know what they're doing? But you could do it yourself or you could speak to a current accountant. You could just do nothing. You could do nothing. You could ignore everyone I'm talking about and you could pick up the phone, jump on your inbox, do whatever you're doing and do nothing. And then before we know it, two, three years go past and that five to ten thousand pounds worth of tax savings, you've potentially lost out for three years worth of that. So we're talking 15 to K of potential tax savings you could have lost. I say could have because I don't know your personal circumstances, but I do know what we unlock and what we identify as tax savings for the majority of limited company business owners. So that's a good point. I'm talking to generally limited company business owners and they're earning over 100k or certainly VAT registered, and that's typically at least what we're looking at. The other option, and it doesn't cost you a penny. And it's just to go in a little bit more detail to understand your circumstances, see if there's the potential to save you tax, is to book a call with myself or my team and you can click the link at the bottom. There'll be a link on the landing page as well. And it's just to learn about your business, your circumstances, and then we will explain how does the tax diagnostic work? Is it something we feel can save you tax? If it is, then we will explain the process and we walk you through it. And just a little bit about the tax diagnostic, because you might be thinking, what is it? How much does it cost? How does it work? So typically, again, the court is a completely free court. It doesn't cost you a penny. We are just trying to figure out, do we think there is the potential to save you tax? When we look at those 33 ways to save tax, if I just go back to them again, we will figure out if there's some easy wins, there's some people we've worked with and we're like, this is going to save you £4,000 in the next three months and that's a real thing that does happen, but we don't know unless we speak to you. If you book a call, we speak to you and we think we can save you tax and we'll be completely honest, it's not for everybody because it depends on your circumstances. Typically going to be 100k in revenue, limited company and, and we only do four of these a month because we can't do them for everybody. But we do have a waiting list that's typically one per week.
[00:24:04] If it is a right fit for you, typically it's going to be anything between 6, 7, 5 to around 1200 pounds. In terms of the investment for the tax diagnostic, if you're wondering, you know it's a sales call, just want to get on the call and try and sell me something. We will not offer you the tax diagnostic if we don't think we can save you money because we have a guarantee. The guarantee is if we don't save you at least £3,000 in tax, we will not charge you a penny. So basically it's a win win. We don't charge you a penny and no one has ever got their money back because we've always saved people between the five and ten thousand pounds. So I won't go into detail because if it's something you're interested in, you need to book the call. But again, you've got all of you could go and do this yourself. It needs to be the right decision for you and your business. But I would love to help you because knowledge is, is not the thing nowadays, it's taking action. So whatever you do, it's all about taking action and hope. I'll speak to you soon. Cheers, guys, thanks. Excuses. Here I am. So.
