Whether you are setting up a new business, or already have a successful, well-established company, there are many ways that you can save money by way of tax reliefs and allowances.
Certain tax initiatives even allow business owners to save money that can be invested back into their organisation.
Annual Investment Allowance (AIA)
This measure remains temporarily increased from £200,000 to £1,000,000 for qualifying expenditure on plant and machinery incurred during the period 1 January 2022, to 31 March 2023.
By extending the temporary increase, the Government hope to deliver positive outcomes for businesses by supporting and encouraging business investment and by simplifying the associated tax relief.
Many who have plans to invest in qualifying plant and machinery should consider if and how they will make use of the ‘super-deduction’.
For those keen to secure a 25 per cent deduction on their tax bill, whilst paying Corporation Tax (CT) at 19 per cent, time is running out as, for some companies, April 2022 sees a reduction in the super-deduction benefit.
R&D tax credits
You may be eligible for R&D tax credits, even if your small business is running at a loss.
The HM Revenue & Customs (HMRC) definition is broad, and you don’t have to be engaged in typical ‘laboratory’ work to benefit from this incentive, meaning many other professionals – such as software developers and architects – are successfully claiming.
Reduce NICs with the Employment Allowance
You can claim Employment Allowance if you’re a business or charity and your employers’ Class 1 National Insurance liabilities were less than £100,00 in the previous tax year.
Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to £4,000.
You’ll pay less employers’ Class 1 National Insurance each time you run your payroll until the £4,000 has gone or the tax year ends (whichever is sooner).
You can only claim against your employers’ Class 1 National Insurance liability up to a maximum of £4,000 each tax year, however you can still claim the allowance if your liability is less than this. In some cases, a company can eliminate their employer’s NIC bill as a result.
Note, it is not possible to claim the allowance if your company only has one employee/director.
How can George Hay help?
At this point in the year, we often emphasise the importance of personal tax planning and making the most of the reliefs and allowances that are available to you, but business tax planning is equally important.
Reliefs and allowances are there to be claimed, if you satisfy qualifying criteria and are entitled to do so, and for the sake of your business’s financial health you should proactively utilise those that apply to you and your business activities.
Whether you think the work you are doing constitutes Research and Development, or whether you have plans to invest in plant and machinery, our team of expert business tax advisers can help.