In this edition of WrightCFO News, we delve into the vital topic of tax reliefs and incentives available for UK businesses. Properly leveraging these opportunities can lead to substantial savings and fuel your growth initiatives. At WrightCFO, we are committed to helping you find every possible financial advantage for your business.
1. R&D Tax Credits: Fueling Innovation
Research and Development (R&D) Tax Credits are among the most significant incentives available. They are designed to encourage companies to invest in innovation regardless of industry.
Whether you’re improving existing products or developing new ones, you may qualify.
– Eligibility: Projects that seek to achieve an advance in science or technology.
– Benefits: SMEs can receive up to 33% of their R&D costs back, while larger companies can claim a tax relief of around 10%.
Steps to Apply:
1. Identify eligible projects and costs.
2. Compile detailed technical and financial documentation.
3. Submit your claim to HMRC as part of your annual tax return.
[Learn more about R&D Tax Credits]
2. Patent Box: Profiting from Intellectual Property
The Patent Box regime allows companies to benefit from a reduced rate of Corporation Tax on profits earned from patented inventions.
– Eligibility: Companies holding qualifying patents or exclusive licences.
– Benefits: A reduced Corporation Tax rate of 10% on profits attributed to patents.
Steps to Apply:
1. Ensure your company holds a qualifying patent.
2. Track income and expenses related to patented products.
3. Elect to apply the Patent Box rate in your tax return.
[Discover more about the Patent Box]
3. Capital Allowances: Maximising Your Investments
Capital Allowances enable businesses to deduct the cost of certain capital expenditures from their taxable profits.
– Eligibility: Purchases of plant, machinery, and business vehicles.
– Benefits: Annual Investment Allowance (AIA) allows you to deduct 100% of the cost of eligible assets, up to £1 million.
Steps to Apply:
1. Identify eligible capital expenditures.
2. Keep detailed records and receipts.
3. Claim the allowance on your tax return.
[Learn about Capital Allowances]
4. Creative Industry Tax Reliefs: Supporting the Arts
For businesses in the creative sectors, there are several specific tax reliefs available, including Film Tax Relief, Animation Tax Relief, and Video Games Tax Relief.
– Eligibility: Companies producing films, animations, video games, and other creative works.
– Benefits: Enhanced deductions or payable tax credits based on qualifying expenditures.
Steps to Apply:
1. Determine eligibility based on the specific creative sector.
2. Maintain detailed production and financial records.
3. Submit your claim as part of your Corporation Tax return.
[Find out more about Creative Industry Tax Reliefs]
5. Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS): Attracting Investment
These schemes offer tax relief to investors purchasing shares in your company, making it easier to attract investment.
– Eligibility: Qualifying new shares in eligible companies.
– Benefits EIS: provides 30% income tax relief, while SEIS offers 50%.
Steps to Apply:
1. Ensure your company meets the qualifying criteria.
2. Issue shares to investors.
3. Apply for EIS or SEIS relief on behalf of your investors.
[Learn more about EIS and SEIS]
By understanding and utilising these tax reliefs and incentives, you can significantly enhance your company’s financial health. At WrightCFO, we are here to assist you in taking advantage of these opportunities and maximising your savings.
Next week, in the final of this three-part series, we will be focusing on business loans.
This article was originally published on LinkedIn on 12th June 2024
