5 tax tips for local businesses

December 29, 2022
2 min
5 tax tips for local businesses

As a small business owner, you must pay a number of taxes each year. Even though these taxes are required, there are ways to make paying taxes a bit easier — relieving some of the burden, also known as tax breaks. We’ve rounded up some essential tips that can help result in tax breaks for your small business so that you can save more money and reinvest in your business.

1. Allowable Business Expenses

All businesses accrue expenses, no matter their size. Allowable business expenses allow you to manage some of the costs of running a business by deducting these expenses from your taxable income. Allowable expenses range from travel and office costs to trainings. Check out a complete list of allowable business expenses and exactly how to file them at this GOV.UK site.

2. Small Business Relief Rates

The Small Business Rate Relief scheme, also known as SBRR, was introduced by the government in 2005 as a way to help out small businesses financially. You might qualify for SBRR if you have a main property and other additional properties, if they have relatable values of less than £2900 and the total relatable value of all properties is under £20,000.

3. Charity Donations

Did you know that charity donations from individuals in the UK are tax-free? A charity or sports club will get an extra 25p for every £1 donated.  It’s important to take VAT into account when considering tax and charities. If your business isn’t a charity, you are responsible for confirming that the charity is eligible for reduced VAT rates.

4. Annual Investment Allowance

Annual Investment Allowance gives you tax relief on large purchases of things you buy to keep and use in your business. Items that qualify for this include most plants and machinery up to a certain amount. What is plant and machinery, you might be wondering? According to GOV.UK, plant and machinery include items you keep to use in your business, cars included as well as fixtures like fitted kitchens or bathrooms. Changes to buildings are also included, excluding repairs.

5. Creative Industries Tax Reliefs

The government launched this relief program in 2013 with the intention of encouraging long term investments in the UK’s creative industries. Industries included in this tax relief are film, high-end TV, animation, video games, children’s TC, theatre, orchestra, museums and galleries. In fact, between 2019-2020 alone, a total of £1.11 billion was paid out in tax relief across all creative industries.

As you can see, there are many tax tips and breaks for small businesses! You can view more programs and tax breaks at GOV.UK.

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