Are you sure your business is claiming every tax break it’s entitled to? A lot of business owners end up paying more tax than they need to, simply because they don’t realise what reliefs and credits they qualify for. The tax system has many ways to help businesses lower their tax bills, but figuring out what applies to you isn’t always straightforward. If you know and are aware, of which reliefs your business can claim, it could mean keeping more money in your pocket and improving cash flow.

That’s where Red Fish Accountancy comes in. We can help businesses like yours maximise deductions, claim tax credits, and manage finances more efficiently, all while making sure everything stays compliant with HMRC. 

So if you’re a sole trader, a growing startup, or an established business, having the right tax strategy can make a real difference. Our goal is to help you save money, reduce stress, and make tax planning as simple as possible.

What is Business Tax Relief?

Business tax reliefs are government incentives designed to encourage investment, innovation, and economic growth. Leveraging these reliefs, your business can reduce its tax liability, freeing up resources for expansion, hiring, or other essential activities.

The UK government offers various tax relief schemes to support businesses. For instance, the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) provide tax reliefs to investors who fund early-stage companies, fostering innovation and job creation.

The Research and Development (R&D) Tax Relief encourages companies to invest in innovation by allowing them to claim back a portion of their R&D expenditure. This scheme has been instrumental in driving advancements across various industries.

The Patent Box scheme is a valuable tax relief designed to reward companies for innovation. If your business earns profits from patented inventions, you could qualify for a reduced Corporation Tax rate of 10% on those profits, significantly lower than the standard rate. 

This scheme is designed to encourage businesses to develop, protect, and commercialise new technologies within the UK, making innovation more financially rewarding.

Taking advantage of this relief, your business isn’t just cutting down on tax bills—it’s creating opportunities for growth. The money saved can be reinvested into expanding operations, hiring more staff, or developing new products. 

For many businesses, this can mean a stronger competitive edge, increased profitability, and greater financial flexibility. Beyond individual business benefits, the Patent Box regime also plays a role in strengthening the UK’s economy by promoting research, development, and cutting-edge advancements in various industries.

What Tax Deductions Can My Business Claim?

Identifying and claiming the right tax deductions is crucial for minimising your tax bill. Here are some common deductions UK businesses can consider: 

Knowing and effectively managing your business expenses is crucial for maintaining financial health and ensuring tax efficiency. When you accurately track and claim allowable expenses, you can significantly reduce your taxable income, leading to substantial savings.

1. Operating Expenses

Operating expenses encompass the day-to-day costs essential for running your business. These include:

  • Rent and Utilities
    Payments made for leasing business premises and covering utility bills such as electricity, water, and heating are fully deductible.
     
  • Office Supplies
    Expenditures on items like paper, pens, and other necessary supplies to keep operations running smoothly can be claimed as allowable expenses.

Accurate record-keeping of these expenses is vital to ensure you claim the full deductions available. According to HM Revenue & Customs (HMRC), allowable expenses are those that are “wholly and exclusively” for business purposes.

Tax Deductions

2. Staff Salaries and Wages

Payments made to employees are deductible expenses and include:

  • Salaries and Wages
    Regular compensation for employee services.
  • Bonuses
    Additional payments rewarding exceptional performance.
  • Pension Contributions
    Employer contributions to employee pension schemes.

Maintaining detailed payroll records is essential not only for claiming these deductions but also for ensuring compliance with tax regulations. Proper documentation supports the legitimacy of your claims and safeguards against potential audits.

3. Travel Expenses

Business-related travel expenses that are “wholly and exclusively” for business purposes are deductible. These include:

  • Mileage
    If personal vehicles are used for business trips, you can claim a mileage allowance.
  • Accommodation
    Costs for hotels or other lodging when traveling for business.
  • Meals
    Expenses for food incurred during business travel.

It’s crucial to distinguish between personal and business travel to ensure only eligible expenses are claimed. HMRC provides guidelines to help determine the deductibility of travel expenses.

4. Professional Fees

Engaging professional services is often necessary for business operations. Fees paid to:

  • Accountants
    For managing financial records and ensuring tax compliance.
  • Solicitors
    For legal advice and services.
  • Consultants
    For expert advice in specialized areas.

These costs are deductible as they are incurred “wholly and exclusively” for business purposes. 

5. Marketing and Advertising

Promoting your business is vital for growth, and related expenses are allowable deductions. This includes:

  • Online Advertising
    Expenditures on digital ads to reach potential customers.
  • Print Media
    Costs for creating and distributing flyers, brochures, or newspaper ads.
  • Promotional Events
    Expenses related to events that showcase your products or services.

Investing in marketing not only helps expand your business but also provides tax benefits. Making sure these expenses are properly documented and directly related to business activities is essential for claiming deductions.

How Can My Business Benefit from Capital Allowances?

Capital allowances let you deduct the cost of certain assets, like machinery or equipment, from your profits before tax. This can lead to significant tax savings.

Annual Investment Allowance (AIA)

AIA allows businesses to deduct the full value of qualifying assets purchased within a year, up to a certain limit. This means you can invest in necessary equipment and reduce your taxable profits simultaneously.

First-Year Allowances

Some energy-efficient or environmentally friendly equipment qualifies for a 100% first-year allowance, enabling you to deduct the entire cost in the year of purchase.

Business Documents, Auditor

What is the Research and Development (R&D) Tax Credit Scheme?

The Research and Development (R&D) Tax Credit Scheme is a UK government initiative designed to encourage businesses to invest in innovation. If your company is developing new products, processes, or services, or enhancing existing ones, you might be eligible for this relief.

Eligibility Criteria

To qualify for R&D tax relief, your project must aim to make an advance in science or technology. This involves resolving scientific or technological uncertainties that a professional in the field cannot easily overcome. 

It’s not limited to laboratories or tech firms; many industries engage in qualifying R&D activities without realising it. For instance, improving manufacturing processes or developing new software solutions can qualify. The key is that the project seeks to achieve something that isn’t readily deducible by a competent professional in the field.

Benefits

For Small and Medium-sized Enterprises (SMEs), the R&D tax relief allows you to:

  • Deduct an extra 86% of your qualifying R&D costs from your taxable profit, on top of the normal 100% deduction, making a total 186% deduction.
  • Claim a payable tax credit if your company is loss-making, worth up to 10% of the surrenderable loss.

This means that for every £100,000 spent on qualifying R&D, your company could reduce its taxable income by £186,000. If you’re not in profit, you can receive a cash credit, which can be particularly beneficial for startups and growing businesses looking to improve cash flow.

It’s important to note that tax laws are subject to change. Therefore, consulting with a tax professional is advisable to get the most current advice tailored to your situation.

How Can Small Businesses Benefit from Business Rates Relief?

Managing business rates can be a significant financial challenge for small enterprises. However, the UK government offers relief schemes to alleviate this burden, notably the Small Business Rate Relief (SBRR) and Rural Rate Relief.

Small Business Rate Relief (SBRR)

SBRR is designed to support small businesses by reducing their business rates liability. Eligibility for this relief depends primarily on the rateable value of your property:

  • Properties with a rateable value of £12,000 or less: Qualify for 100% relief, meaning you won’t pay any business rates.
  • Properties with a rateable value between £12,001 and £15,000: Receive tapered relief, decreasing gradually from 100% to 0%.

For instance, if your property’s rateable value is £13,500, you would receive a percentage of relief between 100% and 0%, depending on the exact value. It’s important to note that SBRR is generally available to businesses that occupy only one property. 

However, if you occupy additional properties, you may still qualify, provided each additional property’s rateable value is less than £2,900 and the total rateable value of all your properties doesn’t exceed £20,000 (£28,000 in London).

Rural Rate Relief

For businesses operating in rural areas, the Rural Rate Relief offers substantial support. To be eligible:

  • Location: Your business must be in a designated rural area with a population below 3,000.
  • Type of Business: You must be the only village shop or post office with a rateable value up to £8,500, or the only public house or petrol station with a rateable value up to £12,500.

Qualifying businesses receive 100% rate relief, effectively eliminating their business rates liability. This relief aims to support essential services in rural communities, ensuring their sustainability.

How to Apply?

Both reliefs are administered by local councils. To apply:

  1. Contact Your Local Council: They can provide specific guidance and application forms.
  2. Provide Necessary Documentation: This may include details about your property’s rateable value and the nature of your business.

It’s advisable to reach out to your council promptly to ensure you receive any relief you’re entitled to. 

Keep in mind that regulations and thresholds can change, so staying informed through official channels is essential.

Maximising Tax Savings with Expert Guidance

Tax reliefs and deductions are essential for keeping your business financially healthy. Every pound saved through legitimate tax reliefs can be reinvested into growing your business, hiring new staff, upgrading equipment, or improving operations. 

Yet, many businesses miss out on valuable deductions simply because they are unaware of what they qualify for or struggle with the complexities of tax regulations. Making sure that your business claims every available relief is not just about cutting costs, it’s about maximising profitability and maintaining a steady cash flow.

Red Fish Accountancy is an expert in simplifying tax planning for businesses across Northern Ireland. We understand that tax laws can be overwhelming, and missing out on potential savings can be frustrating. 

That’s why we work closely with our clients to identify every possible tax relief they can claim, from business deductions and R&D tax credits to VAT advice and business rates relief. Our team ensures that you’re not overpaying and that your business stays fully compliant with HMRC regulations.

If you’re a startup, a growing business, or an established company looking for better financial strategies, we’re here to help you make the most of the tax relief opportunities available. Don’t let complicated tax rules hold your business back—let us handle the details while you focus on running and expanding your business.

Contact us today and find out how we can help you save money, stay compliant, and maximise your business’s financial potential!