June 2026

Most business owners don't want to pay more tax than they need to – but many perfectly legitimate opportunities are often overlooked.

From annual staff functions and family members working in the business to electric company cars and relevant life policies, we've rounded up some of the practical tax-saving ideas we discuss most often with our clients.

You might already be making use of some of them, but there's a good chance you'll find at least one opportunity you hadn't considered.

Employers can provide employees and directors with non-cash vouchers of up to £50 per gift, up to six times per tax year.

This means you could provide up to £300 per person each year completely free of Income Tax and National Insurance.

Examples include:

Supermarket gift cards

Restaurant vouchers

Birthday or seasonal gifts

Recognition for special occasions

To qualify:

The voucher cannot be cash or exchangeable for cash.

It cannot form part of a contractual entitlement.

It must not be given in recognition of work performed.

For many owner-managed businesses, this is one of the simplest ways to extract additional value tax-efficiently.

Thinking of organising a summer barbecue, Christmas meal or team celebration?

Businesses can spend up to £150 per person, per year (including VAT) on annual staff events without creating a taxable benefit for employees.

The exemption can cover:

Meals and drinks

Entertainment

Venue hire

Transport associated with the event

Importantly:

The event must be available to all employees.

The £150 limit includes VAT.

If the total cost exceeds £150 per person, the whole amount may become taxable.

What if I'm a sole director?

Many people assume this relief only applies to larger businesses, but that's not the case. If you're the sole director of your own limited company with no other employees, you can still benefit from the exemption.

That means you could take yourself out for a meal and claim up to £150 (including VAT) through the company, provided it is genuinely an annual staff function and the normal conditions are met.

It's a simple relief that many small company owners overlook.

Private healthcare has become increasingly popular, particularly with long NHS waiting times.

If your company pays for private medical insurance, you may benefit from:

Corporation tax relief on the premiums.

Faster access to treatment.

Additional support services such as counselling and physiotherapy.

However, private medical insurance is generally treated as a Benefit in Kind, meaning it may need to be reported via payroll or a P11D.

One of the most tax-efficient ways to extract profits from a limited company is through employer pension contributions.

Potential advantages include:

Corporation tax relief.

No employee National Insurance.

No employer National Insurance.

No Income Tax payable by the individual at the point of contribution.

There are annual allowance rules to consider, and contributions above those limits can trigger additional tax charges, so careful planning is important.

If family members genuinely help in the business, paying them for the work they do can be a legitimate and tax-efficient way to reduce your company's taxable profits.

This could include:

Administrative support

Filing and organising paperwork

Social media assistance

Cleaning and maintenance

Helping with deliveries or stock management

Even older children who undertake real work for the business may be paid.

However, there are some important rules:

The work must actually be carried out.

The amount paid must be commercially justifiable.

The pay should be comparable to what you would reasonably pay someone else to do the same role.

Appropriate payroll records should be maintained.

HMRC may challenge arrangements where salaries are excessive or there is little evidence that genuine work has been performed, so it's important to get this right.

Company cars have changed dramatically in recent years, with electric vehicles offering some particularly attractive tax advantages.

Potential benefits include:

Very low Benefit in Kind (BiK) rates compared to petrol and diesel vehicles.

Corporation tax deductions on qualifying costs.

Deductible lease costs.

Relief for insurance, servicing and charging costs.

Lower personal tax liabilities for directors and employees using the vehicle privately.

For businesses that need vehicles anyway, choosing an electric car can significantly reduce the overall tax burden.

As with any company asset, maintaining proper records and having clear policies around private use is essential.

Businesses can generally pay for eye tests required by employees who regularly use display screen equipment.

This includes employees using:

Computers

Laptops

Tablets

Smartphones

Other work-related screens

Benefits can include:

Corporation tax deductions.

No taxable benefit for qualifying eye tests.

Potential reimbursement of glasses needed specifically for screen use.

Does this apply to sole director companies?

Yes. If you are a director working regularly on screens as part of your role within the business, your company can generally cover the cost of qualifying eye tests and, where required specifically for screen use, certain glasses without creating a taxable benefit.

Given how many owner-managed businesses spend most of the day in front of a computer, this is another relief that's often missed.

Life insurance isn't just about protecting your family – the way a policy is structured can have significant tax implications.

In some circumstances, certain business protection policies may qualify as an allowable business expense, reducing your company's taxable profits.

In addition, many life policies can be written in trust, meaning that on death the proceeds may:

Pass directly to your chosen beneficiaries.

Fall outside of your estate for Inheritance Tax purposes.

Be paid more quickly without waiting for probate.

Examples can include:

Relevant Life Policies for directors and employees.

Key Person Insurance.

Shareholder protection arrangements.

However, the tax treatment varies depending on the type of policy and who benefits from it. A policy that is highly tax efficient in one situation may not be in another, so it is important to seek advice before putting cover in place.

Reviewing existing cover is often worthwhile to ensure it still meets your needs and is structured in the most tax-efficient way possible.

Many sole traders miss out on legitimate deductions that could reduce their taxable profits.

Areas commonly forgotten include:

Claiming business mileage using HMRC's approved mileage rates.

Claiming allowable use of home expenses.

Making pension contributions that may attract tax relief.

Claiming capital allowances on qualifying equipment and machinery.

Claiming the business proportion of phone and broadband costs.

Ensuring professional subscriptions and insurance costs are deducted where appropriate.

Good record keeping is essential to support these claims should HMRC ever ask questions.

How We Can Help

Every business is different, and the opportunities available to you will depend on your circumstances, goals and future plans.

At Peregrine Chartered Certified Accountants, we work closely with our clients to identify practical ways to improve profitability and reduce unnecessary tax exposure. We remove the jargon, explain things in plain English and work alongside business owners throughout the year – not just when deadlines are approaching.

Whether you're a sole trader, limited company director or planning for the future, we'd be happy to help you make sure you're taking advantage of the reliefs and opportunities available to you.

If you'd like to have a chat about your business and whether there are any tax-saving opportunities you may be missing, please get in touch.

Please note that tax legislation can change and the suitability of any planning depends on your individual circumstances. Professional advice should always be sought before taking action.text to edit it.