When organising and operating a small enterprise, it’s fairly often “all hands-on deck”, with all efforts centered on the day-to-day operating of the enterprise. It’s simple, subsequently, to overlook about areas resembling tax aid which don’t come underneath the day by day administration of your corporation. Nevertheless, forego these tax breaks and you may miss out on methods wherein you can also make your corporation extra environment friendly and aggressive.
A lot of tax breaks are relevant to small companies, some that are business particular and a few that are usually relevant to all SMEs.
If your corporation meets the HMRC-qualifying standards, these tax breaks may considerably decrease your tax invoice, making your corporation extra worthwhile and environment friendly with little additional effort in your half.
The next tax breaks can be found to SMEs so let’s have a look and see if your corporation may very well be eligible:
Employment Allowance
If your corporation has workers which you pay by means of PAYE, Employment Allowance is value as much as £10,500 off your employer’s Class 1 Nationwide Insurance coverage invoice per tax 12 months. It reduces your employer’s Nationwide Insurance coverage invoice every time you run your payroll till the £10,500 is used up otherwise you attain the tip of the tax 12 months, whichever comes first.
You’ll be able to solely declare this towards Class 1 Nationwide Insurance coverage which you’ve gotten paid, however you’ll be able to nonetheless declare it even when your Nationwide Insurance coverage invoice is lower than £3,000 per tax 12 months.
Most companies, charities and CASCs (Neighborhood Novice Sports activities Golf equipment) are eligible for this allowance, together with these which make use of a care or help employee for private care. You’ll be able to’t declare that is you utilize any home, family or private employee until it’s for care or help work. The opposite circumstances which might make you ineligible embody Private Service Corporations (PSCs) working inside IR35 guidelines, companies which do greater than half of their work for the general public sector (such because the NHS), and people corporations with a sole director and worker who’re paid over the Secondary Threshold of £157 per week.
It’s actually easy to assert Employment Allowance – you simply want to assert this by means of your payroll software program by getting into “sure” into the Employment Allowance indicator discipline. In case your small enterprise outsources its payroll, be sure to ask your payroll supplier to do that for you.
Annual Funding Allowance (AIA)
This allowance is a part of your Capital Allowances and permits you to deduct the complete worth of a qualifying AIA merchandise out of your income earlier than tax, though you could must pay tax later in case you go on to promote the merchandise.
You’ll be able to declare this on most plant and equipment belongings, together with integral options of buildings, sure fixtures, alterations to put in plant and equipment (though not for repairs) and for the price of demolishing plant and equipment. You’ll be able to’t declare AIA on vehicles or on gadgets which have been given to you or your corporation, or gadgets owned for any pre-business motive though you could possibly declare writing down allowances on these which might mean you can deduct a proportion of their worth per 12 months out of your income.
As of 2025, the AIA quantity is ready at £1 million – to be able to stimulate enterprise funding and encourage companies to spend money on their plant and equipment. Previous to this improve, the AIA quantity was £200,000 and the allowance quantity tends to fluctuate.
Small Enterprise Charges Reduction
If your corporation property has a rateable worth of lower than £15,000, it is best to be capable of declare Small Enterprise Charges Reduction, which operates on a sliding scale so that companies with a rateable worth of lower than £12,000 would pay no enterprise charges and people with a rateable worth of £15,000 or above wouldn’t be entitled to any aid on their enterprise charges. For instance, if your corporation property has a rateable worth of £13,500 you’ll be entitled to 50pc off your corporation charges invoice.
You’ll be able to solely declare this you probably have one sole enterprise property though in case you purchase a second property, you’ll be capable of hold your entitlement for 12 months. To say this charges aid, you want to contact your native council.
There are different types of charges aid, even in case you aren’t eligible for Small Enterprise Charges Reduction – for instance, your corporation property is likely to be eligible for Rural Charges Reduction if it’s a protected enterprise (resembling the one store or submit workplace in your rural space). Otherwise you is likely to be eligible for a ‘Retail Low cost’ (Retail, hospitality and leisure aid), which When you’re eligible, may get you 40% off your corporation charges payments for the 2025 to 2026 billing 12 months (1 April 2025 to 31 March 2026). You would want to contact your native council to examine about eligibility.
SME R&D Tax Reduction
R&D (analysis and improvement) reliefs can be found to companies which create or considerably work in the direction of advances in science and know-how, though these advances must affect the general discipline wherein you’re working inside, not simply your corporation, they usually received’t be allowed if they’re merely utilizing a sure know-how in your business for the primary time.
There are lots of advisers on the market claiming that R&D reliefs might be claimed by companies that are completely past the scope of science and know-how, however it is best to use warning if attempting to assert R&D Reduction on this approach as HMRC’s standards are maybe stricter than some would assume.
Of explicit curiosity to small companies is SME R&D Reduction, which is relevant to companies with lower than 500 workers and a turnover of lower than €100m or a steadiness sheet whole underneath €86m. In case you are eligible for this aid, you’ll be able to deduct an additional 86pc of your qualifying prices out of your yearly revenue in addition to the conventional 100pc deduction. If your corporation is loss-making, you’ll be able to declare a tax credit score of as much as 14.5pc of your surrender-able loss. Your qualifying prices can embody workers prices in addition to consumable gadgets, subcontractor prices and software program charges however you’ll be able to’t embody capital expenditure or lease and charges.
Inventive Industries Tax Reduction (CITR)
If your corporation is in one of many inventive industries, you could be entitled to assert considered one of a sequence of tax reliefs aimed on the inventive area.
These industries and reliefs are as follows:
- Movie (FTR)
- Excessive-end tv (HTR)
- Kids’s TV (CTR)
- Video video games (VGTR)
- Animation (ATR)
- Theatre (TTR)
- Orchestra (OTR)
- Museums and galleries exhibitions (MGETR).
To be able to be eligible for any of those reliefs, companies concerned within the movie, TV, or Video Video games sectors, must cross a cultural check administered by the BFI, but when profitable this may mean you can deduct between 80pc and 100pc of qualifying expenditure relying on the inventive business wherein your corporation is predicated.
What you are promoting have to be accountable for Company Tax so as to have the ability to declare any of those reliefs.
Seed Enterprise Funding Schemes (SEIS)
Lastly, while not a tax break as such, small companies may be capable of profit from SEIS, which is a type of enterprise capital scheme designed to attract funding into your corporation. If your corporation’s scheme is eligible, you may obtain a most of £250,000 in funding.
These schemes present tax aid in your traders – nevertheless, each traders and the enterprise want to fulfill sure HMRC standards to profit from the tax break and SEIS tax aid might be withdrawn if yours or your traders’ circumstances change sooner or later.
An organization can use the SEIS scheme if it:
- is established within the UK
- carries out a brand new qualifying commerce
- just isn’t buying and selling on a recognised inventory trade on the time of the share problem
- has no preparations to develop into a quoted firm or a subsidiary of 1 on the time of the share problem
- doesn’t management one other firm (until that firm is a qualifying subsidiary)
- has not been managed by one other firm for the reason that date of being integrated
To be able to be eligible to funding underneath SEIS, your corporation should have lower than 25 full time workers, gross belongings of lower than £350,000, and never be a member of a partnership.
As a result of circumstances set by HMRC to make sure that these schemes are tax compliant, it’s sensible to hunt steering, both from HMRC who’ve a particular division to take care of enterprise capital schemes, or from a specialist consultancy.
Important affect
Whereas not each SME will likely be eligible for each considered one of these tax breaks, the place these are relevant to your corporation, they’ll make a major affect on the profitability and longevity of your corporation, particularly in attempting financial circumstances.
David Redfern is director of DSR Tax Claims
Additionally see: How can my small enterprise profit from tax reliefs obtainable?
Initially revealed in 2019 – Up to date with new standards and thresholds knowledge in 2025.
