Embarking on a new business venture can be both exhilarating and challenging. Balancing expenses with income is crucial during the initial phase. Fortunately, the UK tax system provides various allowances and reliefs that can significantly reduce your tax bill, assisting in your business’ financial stability. Here, we outline several key tax reclaim opportunities that can benefit startups.
1. Capital Allowances
a. Annual Investment Allowance (AIA):
Businesses can reclaim costs on most plant and machinery up to a certain limit under the AIA, effectively reducing the tax bill.
b. Writing Down Allowances:
If you exceed the AIA limit, Writing Down Allowances allow you to deduct a percentage of the item's value from your profits each year.
2. Research & Development (R&D) Tax Credits
R&D Tax Credits are designed to incentivise innovation. Businesses developing new products, processes or services may be eligible for a reduction in Corporation Tax or a cash repayment.
3. Entrepreneurs' Relief
This relief allows business owners to pay a reduced rate of Capital Gains Tax of 10% on the sale of all or part of their business, under specific conditions.
4. Relief on Business Property
Entrepreneurs can claim tax relief on the purchase or lease of business premises through Business Property Relief, potentially reducing Inheritance Tax on property.
5. Employment Allowance
This allowance reduces the National Insurance Contribution (NIC) bill for employers, aiding businesses in growing their teams.
6. Professional Fees
The costs incurred for professional advice related to business operations, like accountancy fees, can generally be deducted from your profits before tax.
7. Home Office Expenses
If you use a part of your home for business, you may be able to reclaim expenses for utility bills, rent, or mortgage interest.
8. Staff Training
Training costs for employees can usually be claimed as a business expense, investing in the workforce without additional tax burdens.
9. Marketing & Advertising
The costs associated with promoting your business, including website development, online advertising, and printed materials, are generally tax-deductible.
Getting Professional Advice
Understanding and claiming relevant tax reliefs and allowances is essential for managing your startup's finances effectively. At Angel's Business Solutions Ltd, we offer tailored advice to help new businesses navigate the complex tax landscape, ensuring you reclaim every entitlement, optimising your financial health.