Top 7 Tax-Saving Strategies for Small Business Owners in 2025

Running a small business in 2025 comes with its challenges, but smart financial planning can help you maximise profits and reduce unnecessary tax burdens. Here are 7 effective tax-saving strategies every small business owner should consider:

1. Claim All Allowable Business Expenses

Keep accurate records of your business expenses and make sure to claim everything you’re entitled to—this includes office supplies, business travel, utilities, professional fees, marketing, and more. Every receipt counts.

2. Make Use of the Trading Allowance

If you earn under £1,000 from casual or side income (like freelancing or selling online), the trading allowance means you may not have to declare or pay tax on it. Ideal for part-time or small-scale business ventures.

3. Consider Incorporation

Depending on your income level, forming a limited company could reduce your tax liability. Corporation tax rates can be lower than personal income tax rates, and you can also control how you draw income through a combination of salary and dividends.

4. Contribute to a Pension Scheme

Pension contributions are a tax-efficient way to save for the future. Contributions made through your business reduce your company’s profits and therefore lower your corporation tax.

5. Use the Annual Investment Allowance (AIA)

If you purchase equipment or machinery for your business, you can deduct the full value from your profits before tax using the AIA—currently up to £1 million per year.

6. Employ Family Members (If Legitimate)

If family members genuinely help in your business, paying them a fair wage through the company can be tax efficient. It must be a real role and payment must be justifiable.

7. Time Your Income and Expenses

Deferring income to the next tax year or bringing forward deductible expenses can reduce your current year’s taxable income. This is especially useful near year-end, and your accountant can guide the timing.

Need Help Reducing Your Tax Bill?

At Taxes Done Right Ltd, we help small businesses like yours save money, stay compliant, and grow confidently. Whether you’re just starting out or looking to restructure for better tax efficiency, our expert accountants are here to guide you every step of the way.

Get in touch today for a free consultation.