Running your own business can be challenging. You have to deal with various tasks—from paying the bills on time to managing the accounts and payroll. If there are ways you can ease your financial burden, you should take them.
If you want to recover some of the taxes you paid, you can claim tax relief. This guide will discuss three of the tax reliefs your small business can claim. It will significantly reduce your tax bill. For business and tax advice in London and Walsall, visit us at IBISS & CO.
National Insurance
If you run a small business, you’re the employer. In this case, you can claim employment allowance through the National Insurance relief. The maximum amount you can claim is £4,000 for each business, not each employee.
So, if you’re paying Class 1 National Insurance, you can pay up to £4,000 less. If you didn’t have liabilities worth £100,000 in the previous tax year, you are eligible for this tax relief. Charities are also eligible for it. However, limited companies with no employees and just one director are not qualified.
Annual Investment Allowance
This is another tax relief businesses can claim. Until the end of this year (2022), the maximum Annual Investment Allowance (AIA) you can claim is £1 million. This is a capital allowance, and small businesses can deduct plant or machinery costs from their profits when paying taxes.
If a business uses cash basis accounting, they can’t claim this allowance (apart from on cars). For those businesses using accrual basis accounting, this allowance can be claimed on cars, computers, building parts, fixtures, costs of disposing of plant and machinery, and alterations for installations.
Research & Development Relief
If your company is working on innovative technology and science projects, you can claim the R&D tax relief. Even if the project isn’t successful, you can still qualify for this relief—you have to make sure your aim is research and development for the purpose of business growth.
For small businesses, there’s a specific SME R&D tax relief. They can deduct 130% of the costs incurred for research and development from their annual profit. This is in addition to the normal 100% deduction, making it a total of 230% deduction. If the company starts going into a loss, small businesses can claim 14.% of this loss as a tax credit.
Visit IBISS & CO. today to see how our chartered accountants and tax advisors can help your small business. We have the best tax accountants in London and Walsall who can help reduce your tax liability and help you claim various reliefs.
Reach out to us today to connect with our corporate tax advisor.
