No one likes paying tax, so why do we ignore some of HMRC’s greatest tax efficient schemes. Partly because some accountants don’t understand them, and if we don’t know that they are available we can’t ask for them!
After all, we are busy running our business so we need to be made aware of these schemes, and we need someone to help us put them in place!
I’m very grateful to the team from The Rift Group for their brilliant lessons in these 3 schemes. This blog is designed to give you an overview but you’ll need expert help and I recommend you talk to the team at RIFT www.riftgroup.com
Let’s start with the oldest one first Capital Allowances, they’ve been around since 1878:
Put simply, Capital Allowances can substantially reduce your tax bill. To qualify you have to be paying UK corporation tax or UK personal tax and be a commercial property owner. Here you can claim for refurbishment expenses, and if the previous owner did not claim when they owned the building and 95% haven’t, you can claim their costs too. This is a complicated area and your accountant will need a specialist surveyor to help prepare the claim. In 2010 – 11 £75bn was reclaimed but that only accounts for 5% of commercial properties in the UK. For more information see www.riftcapitalallowances.com
The second tax break is Research & Development Tax Relief.
Put simply, R&D Tax credits can reduce your tax bill or even give you a cash injection if you are making a loss. To qualify you must be a UK limited company and be carrying out R&D activity. R&D tax relief can be claimed for a much wider range of activities than most business owners realise. Many people incorrectly assume that R&D activity is only carried out by companies with staff in white lab coats! But it’s actually a financial reward for technical developments that seek to deliver a substantially improved product, service or process. So lots of diverse businesses are eligible. Of 4.8M UK SME’s only 6180 claimed last year but they received an average of £55,000. Are you missing out?
Finally, Patent Box makes up the threesome. According to HMRC ‘The Patent Box' will allow companies to elect to apply a 10% corporation tax rate from 1 April 2013 to all profits attributed to qualifying patents, whether paid separately as royalties or embedded in the sales price of the product’. The government is looking to reward companies with who exploit their intellectual property (IP) rights. You will have to opt-in for this benefit, so anyone for 10% corporation tax?
Want more information on R&D Tax Credits and Patent Box, then check out www.riftresearch.com and then talk to your accountant.
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