Tax Breaks Every Small Business Should Know About

A tax advisor is an accounting professional who specialises in all things associated with tax and the laws surrounding it. Hiring tax advisors North Wales will enable your small business to learn about tax breaks that might have been previously unknown.

During the setup of any small business, it is often the ‘all-hands-on-deck’ attitude that prevails, with maximum effort being spent on the day-to-day running of the business. So, it can be easy to forget about areas such as tax relief which doesn’t come under the umbrella of daily management. However, forgoing these tax breaks could see your business missing out on ways to become more efficient and competitive.

A number of tax breaks are applicable to small businesses, some of which are industry specific and some which are generally applicable to all SMEs. If your business meets the appropriate HMRC-qualifying criteria, these tax breaks could have a significant impact on lowering your tax bill – making your business more profitable and efficient, with little to no extra effort on your part. Putting your trust in a quality North Wales tax advisor will have lots of benefits for your small business.

Annual Investment Allowance (AIA)

This allowance forms part of your Capital Allowances, and it allows you to deduct the full value of a qualifying AIA item from your profits before tax – though you might need to pay tax later if you then go on to sell the item in question.

This can be claimed on most plant and machinery assets, including integral features of buildings, certain fixtures, alterations to install plant and machinery and for the cost of demolishing plant and machinery. AIA cannot be claimed on cars or items that have been given to you or your business.

The AIA amount has been temporarily increased to £1 million between January 1st 2019, and December 31st 2020 in order to stimulate business investments and to encourage businesses to invest in their plant and machinery.

Employment Allowance

If your business has employees which are paid through PAYE, employment allowance is worth up to £3,000 off the Class 1 National Insurance bill per year. You can only claim for this relief against Class 1 National Insurance which has been paid; but it can still be claimed for even if your National Insurance bill is less than £3,000 per tax year.

Most businesses, charities and CASCs (Community Amateur Sports Clubs) are eligible for this specific allowance, including those who employ a care or support worker for personal care.

SME R&D Tax Relief

R&D (research and development) reliefs are available to businesses which create or significantly work towards advances in technology and science, although there is the requirement that the advances have to have an impact in the overall field in which the company is working in.

Small Business Rates Relief

If your business property has gotten a rateable value of less than £15,000, you should be eligible to claim Small Business Rates relief, which operates on a sliding scale so that businesses with a rateable value of less than £12,000 would pay no business rates, and those with a rateable value of £15,000 or above would not be entitled to any relief on their business rates.