How ‘Forgotten’ Tax Breaks Can Put More Money into Your Business

Tax Breaks and deductions can make a big difference to your business, something that may be overlooked unless you take professional advice and employ the services of a reputable accountant. 

After years of planning, blood sweat and tears, you’ve finally set up your own business. You’ve put thought into your company name, branding, website and staffing. But what about tax savings?

Bennett Verby look at some tax breaks that could free up money to put back into your business:

Annual Investment Allowance (AIA)

You can claim 100% tax relief on any assets that you own (not lease) which qualify as machinery and plant. The rules are quite stringent (for instance, company cars do not qualify), but it’s worth asking your accountant about AIA.

Employment Allowance

Employment Allowance reduces the amount of National Insurance you have to pay each year by up to £3,000, by claiming the allowance via payroll. You cannot claim Employment Allowance if your company has only one employee or director. 

Enhanced Capital Allowance (ECA)

This tax break relates to certain energy saving equipment, such as electric or hybrid cars, water saving technology or certain boilers and motors. This is a first year allowance, so you can deduct the full cost from your first year profits before tax, or in subsequent years using writing down allowances.

Investment schemes: SEIS and EIS

Looking for outside investment? Tax breaks can be given to potential investors using a Seed Enterprise Investment Scheme (SEIS) for new companies, or an Enterprise Investment Scheme (EIS) for all SMEs. These schemes give income tax and CGT relief to investors, which may be a tempting opportunity; however the rules and procedures are very strict and must be approved by HMRC. It’s best to ask your accountant if these schemes would work for you.

R&D tax credits

You may have heard a lot about R&D tax credits going unclaimed. Even if you aren’t a mad scientist, it’s worth asking for advice from a tax expert to see if you can benefit from this incentive. Businesses in industries including agriculture, e-commerce and real estate have all made successful claims for employment costs, materials and consumables and software.

The Next Steps

Of course, a good accountant will check all possible deductions are included, looking for all the available savings available for you, to make sure you pay exactly the right amount of tax, no more and no less.

Expert Opinion provided by Bennett Verby