What this page is, and isn't
A map of the real options, not a pitch for one of them
If you've searched this question, you've probably already found a page listing five or six things and moved on none the wiser about which applies to you. That's the gap this page tries to close: an honest survey of what actually reduces a profitable company's corporation tax bill, with each option weighted by who it genuinely fits, not just listed. Some of what belongs on this list isn't tax planning at all. It's a sign the real need is finance rather than a smaller bill, and we'll say so where that's true.
The real list
What actually reduces the bill
- R&D tax relief. For a company that's genuinely spent money solving a technical problem it wasn't obvious how to solve, this can be the largest single relief available. It scales with qualifying spend, and the cash credit is only limited by a PAYE and National Insurance cap, with any excess carried forward. It's also the one most generic "reduce corporation tax" content underweights, for reasons the next section explains.
- Full expensing and capital allowances. A 100% first-year deduction on qualifying plant and machinery investment, plus the wider capital allowances regime (see gov.uk's capital allowances guidance). Unlike R&D relief it isn't really a discretionary claim; it's largely a case of your accountant applying it correctly when you buy the right kind of asset.
- Employer pension contributions. A contribution paid wholly and exclusively for the purposes of the trade is an allowable deduction before corporation tax is calculated (see HMRC's Business Income Manual on pension scheme deductions). Straightforward, but it only reduces tax by as much as you can genuinely afford to contribute.
- Patent Box. A reduced 10% corporation tax rate on profits from qualifying patented IP (see gov.uk on the Patent Box). Most companies don't hold a qualifying patent, but for the ones that do it's a real, fixed rate.
- Trading losses relief. A loss-making period can be carried back against a prior profitable year, reclaiming tax already paid (see gov.uk on claiming relief from trading losses). You can't plan towards it, but it's genuinely useful when the figures fall that way.
- Charitable donations relief. Qualifying donations (cash, equipment, trading stock, land or shares) are deductible from profits before tax (see gov.uk on tax when your company gives to charity). Usually small beside the others, and easy to add on top.
- Everything else. The ordinary allowable business expenses every company already deducts: staff costs, rent, professional fees and so on. These aren't a "relief" in the sense the rest of this list means; they're the baseline every profit figure already reflects before any of the above gets applied.
Why R&D gets buried
Nobody searches for a scheme's own name
R&D tax relief now operates through the merged R&D expenditure credit scheme, alongside Enhanced R&D Intensive Support (ERIS) for the most R&D-intensive loss-making SMEs. Both apply to accounting periods beginning on or after 1 April 2024 (see gov.uk on the merged scheme and ERIS). That replaced the older separate SME and large-company RDEC structure most content online still describes. None of that is language a business owner searching "how to reduce corporation tax" would ever type. "RDEC", "merged scheme" and "ERIS" are industry terminology, not search terms, and content written in scheme names is effectively invisible to the person who actually needs it. That's a real part of why this gap exists: the relief that's often worth the most is described in words nobody outside the industry uses.
In practice: the businesses most likely to miss R&D relief entirely aren't the ones with no qualifying work. They're the ones who assume "R&D" means a dedicated lab team and never check. Process changes, material substitutions and internal tooling built to solve a genuine problem all show up in real claims, well beyond software and manufacturing.
Where this actually points
Alternatives and limitations
Not every profitable company has a relief waiting to be found, and R&D relief specifically only fits companies that have done genuine qualifying technical work. It isn't a lever you can manufacture after the fact. If nothing on this page actually fits, that's a useful answer too: the honest next step for a lot of businesses is finance for growth rather than a smaller tax bill (see Invoice Finance, or the wider list of facilities on the homepage). And if R&D looks like the right shape but you're not sure your work qualifies, that uncertainty is usually a reason to check properly rather than assume it doesn't. See R&D Tax Relief, or the full side-by-side comparison for how it stacks up against everything else here.
