Managing your business accounts can be very complicated, but it is worth having a full understanding of your company’s finances, as there are a number of tax breaks you might be able to take advantage of that you did not even know existed.
Here are five tax relief schemes that might help you:
With this tax break, some of your company’s assets can be written off against the profits it is taxed on. You can claim this when you buy equipment, machinery or vehicles, or pay for daily running costs and interest payments for buying assets.
These are all tax deductible, so it is worth finding out exactly what you can claim before completing your tax return.
2. Patent Box
This applies to companies that make a profit from patented inventions and pay Corporation Tax.
Your business has to own or exclusively license-in patents that have been granted by the UK Intellectual Property Office, the European Patent Office, or some countries in the European Economic Area. It is worth noting you will also need to prove your company has made a significant contribution to the creation or development of the invention or an item that incorporates the invention.
If this applies to you, you will be able to pay a lower Corporate Tax of 10%.
3. Research and Development Expenditure Credit (RDEC)
Any small or medium-sized enterprise that is liable for Corporation Tax can claim tax relief for spending on research and development (R&D). They are able to receive 230% of relief on R&D costs.
This means that your business will have the income that Corporation Tax is deducted from reduced by £230 for every £100 earned.
4. Tax reliefs for the creative industries
You are eligible for this tax break if you have to pay Corporation Tax and are involved in the creation of specific films, ‘high-end’ TV shows, video games, theatre productions, and animation programmes.
The amount of relief you receive depends on what creative industry you work in. For example, you could be entitled to a tax deduction of 80% of qualifying expenditure if your business produces limited budget films.
Alternatively, if you run a theatre production company, you could receive relief of 80% of the total expenditure of producing the show. Find out what you are eligible for here.
5. Entrepreneurs’ Relief
Businesses qualify for entrepreneurs’ relief when they dispose of their company as a sole trader or partner, when they have shares and own at least 5% of the business’ shares, or when they have assets lent to the enterprise.
With this tax break, you can pay tax at 10% on qualifying assets, as opposed to the normal rate of 18% or 28%. Therefore, if you are considering moving on from your business, it is worth finding out whether you are eligible for this tax reduction.
To find out more about tax relief schemes in the UK, take a look at www.gov.uk.