DSR Tax Claims, a tax preparation specialist, is urging SMEs to ensure they are making the most of available tax reliefs.
David Redfern, managing director of the firm, has said there are a lot of small and medium sized businesses which are unaware of the tax relief options available.
He is hoping his new guide can increase awareness of the methods by which businesses can improve their profitability and increase their chances of long-term success and growth.
Capital Allowances, and in particular the Annual Investment Allowance (AIA), are available to all businesses using traditional accounting methods rather than cash basis accounting.
AIA allows businesses to deduct the full value of asset purchases from profits before tax.
Redfern commented: “Most plant, machinery and business apparatus is eligible for this relief, with the exception of business cars and other assets which were either owned prior to the business start-up or were gifted to the business although these might still be eligible for writing down allowances, which allows a business to deduct a percentage of the asset value from the profits for each year. Utilising your capital allowances efficiently is essential for making your business tax-efficient.”
The AIA amount was temporarily increased by the government to £1 million between 1st January 2019 and 31st December 2020.
This was done with the intention of stimulating business investment in the UK economy.
Business rates relief is usually only available to businesses with only one business property.
As well as the universal areas of tax relief, there are a number of industry specific tax reliefs.
R&D Relief is available to research and development projects working towards innovation on science and technology, with SME R&D Relief particularly relevant to small businesses with less than 500 staff and a turnover of less than €100 million.
Projects looking to advance science and technology could be eligible although they need to relate to the business’ trade, either in an existing business or a start-up company.