Tax wins for UK SMEs


To stay profitable, SMEs need to cut costs and make the most of efficiency savings, especially through periods of growth. While there are many basic steps a business can make to save money – reducing the cost of everything from premises, basic supplies and staff to energy and postage, for example – businesses often overlook the savings they could make when it comes to tax.


Running a small business or medium-sized enterprise is full-on. It is really no wonder leaders focus on the day-to-day running of the business. While it is admirable that you are working harder to make your business more profitable, did you know that you could in fact add thousands to the bottom line by exploring these tax wins?


If you qualify, these tax breaks could make a huge difference to the business coffers.


SME Research & Development Tax Relief


Small businesses are missing out on millions in R&D tax credit relief.


“Despite being launched in 2000, Research & Development Tax Credit is still a woefully underutilised Government scheme with many companies in the creative, manufacturing and technological industries unaware of the money they could be claiming through the scheme”, says Simon Bulteel, Founder and MD of Research and Development Tax Relief specialist firm, Cooden Tax Consulting.


Research & Development (R&D) Tax Relief is available to any business investing in innovation, specifically innovation projects that are aiming to advance science or technology. Check out Government guidance on R&D Tax Relief, and speak to your accountant or a specialist adviser to see if you are one of the many SMEs missing out and see what costs you can claim tax relief on.


Stay compliant


Not exactly a tax win, and this may seem obvious, but staying compliant will save your business from a possible fine by HMRC. According to a recent report in The Independent, tens of thousands of UK businesses are at risk of failing to follow new rules on keeping digital tax records.


From April 2019, as part of the Government’s ambitious Making Tax Digital scheme, most VAT-registered businesses with a taxable turnover above the VAT threshold are required to keep records digitally and submit VAT returns using software that is compatible with HMRC.


Switching to digital records can also save time and money. Digitisation of accounting records improves accuracy and can bring cost savings in terms of reduced workload and efficiencies.


The Annual Investment Allowance


The Annual Investment Allowance (AIA) is a way to claim tax relief on equipment assets (plant and machinery) that you buy for use in your business. The AIA is a capital allowance, which was introduced by the Government in 2008 for the purpose of encouraging businesses to invest in growth, thus stimulating the economy.


The level of expenditure that can be claimed was set in law permanently at £200,000, but recent legislation passed from the Finance Bill 2018 has temporarily increased the AIA limit to £1,000,000 from January 1st 2019 for 2 years.


Examples of qualifying expenditure include:


  • Computers, office furniture and other office equipment
  • Vans, lorries, trucks, cranes and diggers (but not cars)
  • Building fixtures, such as kitchen and bathroom fittings, or shop fittings
  • Business machines, such as lathes, tooling machines and printing presses
  • Agricultural machinery, such as tractors and combine harvesters
  • Computer-aided machinery, i.e. robotic machines
  • Fibre optic cabling and wind turbines


See more about this scheme and claiming for capital allowances here.


Employment Allowance


Certain employers can claim a reduction of up to £3,000 per year in employer’s National Insurance. This tax break is called the Employment Allowance, and was introduced by the Government in 2014. The Employment Allowance can only be set against an employer’s liability for secondary Class 1 National Insurance Contributions (NICs).

Most businesses qualify for the NI Employment Allowance, including charities and community amateur sports clubs. Limited Company Directors, who are the only employee in the company, do not qualify.


Small Business Rates Relief


Many businesses are unaware of the rates relief that could be on offer to them. If you are a small business owner then you might qualify for business rates relief through the Government’s Small Business Rates Relief Scheme.


Small businesses in England can get relief from business rates if they occupy a single property with a rateable value of less than £15,000. You may still get relief if your business uses more than one property in certain circumstances. These are:


  • When you get a second property, you can still claim existing rates relief on your first property for a further 12 months
  • None of your properties have a rateable value over £2,899
  • The total rateable value of all your properties is less than £20,000 (£28,000 in London)


If your property has a rateable value of £12,000 or less, you will not pay business rates, i.e. you get 100 per cent relief. The amount of small businesses in a property with a rateable value between £12,001 to £15,000 pay scales down gradually from 100 per cent to 0 per cent. If your rateable value is £13,500 you will get 50 per cent off your rates bill.


Find the rateable value of your business here.

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