There are many tax breaks that can help save you and your company money. Tax relief can be forgotten about when running your own business but it’s worth knowing about.
Your business can become more efficient and competitive if you can maximise your money.
Top 5 tax breaks you may not be aware of
Are you paying employees through PAYE? Then, Employment Allowance is worth up to £3,000 off your employer’s Class 1 National Insurance bill per tax year.
This reduces your employer’s NI bill until the £3,000 is used or you reach the end of the tax year. Most businesses are eligible for this allowance – and claiming is simple. You just enter ‘yes’ in the Employment Allowance field in your payroll software.
Annual investment allowance (AIA)
This is part of your Capital Allowances. It allows you to deduct the full value of a qualifying AIA item from your profits before tax. You may need to pay tax later if you go on to sell the item, however.
You can claim this on most machine assets. This includes integral features of buildings, certain fixtures, alterations to install machinery (although not repairs) and for the cost of demolishing machinery.
You can’t claim AIA on cars or on items which have been given to you or your business. And you cannot clam on items owned for any pre-business reason, although you may be able to claim writing down allowances on these which would allow you to deduct a percentage of their value per year from your profits.
Small business rates relief
If your business property has a rateable value of less than £15,000, you should be able to claim Small Business Rates Relief. This operates on a sliding scale so businesses with a rateable value of less than £12,000 would pay no business rates. Those with a rateable value of £15,000 or above are not entitled to any relief on their business rates.
You can only claim this if you have one sole business property although if you acquire a second property, you would be able to keep your entitlement for 12 months.
For the exact rates and information, contact your local authority. This could be a good saving with very little time taken to apply.
Research and development tax relief
Claiming research and development (R&D) tax relief is an option if you’re a limited company and work on innovative projects.
The project doesn’t need to be successful to qualify you for relief – it just needs to aim to research or develop and advance in your field. You can claim this if you have fewer than 500 staff and a turnover of less than €100 million. You should be allowed to deduct an extra 130% of your qualifying costs from your annual profit. Along with the normal 100% deduction, it adds up to a total 230% deduction.
If running your own limited company, you can apply for Marginal Relief to reduce your corporation tax bill. It gives you a gradual increase in your tax rate between the small profits rate and the main rate.
To qualify for this relief on your corporation tax, your company’s profits before 1 April 2015 need to have been between £300,000 and £1.5 million. You can apply for this relief in your Company Tax Return.
You have up to 12 months from filing a return to amend it to claim for Marginal Relief.
If you think your business could benefit from these tax breaks or you want to know more about tax breaks, contact our team today.