Tax allowances, reliefs and exemptions

Annual Investment Allowance is available to sole traders, partnerships and companies which provides 100% relief up to an annual limit of qualifying plant and machinery. Alternatively, for companies, full expensing allows them to deduct the cost of qualifying new plant and machinery from taxable profits in the year of purchase, and it is now a permanent relief rather than a temporary one.

There is a range of capital allowance rates available depending on the nature of the capital expenditure. Therefore, planning the best use, and timings, of these claims across the allowances affects how quickly a business gets relief for its capital spending.

SSE can provide a full exemption of Corporation Tax on gains arising from the sale of qualifying corporate shareholdings, subject to certain ownership and trading requirements being satisfied.

Companies carrying out qualifying research and development can claim R&D tax relief, either as a taxable credit or, for loss-making R&D intensive companies, an enhanced deduction and payable cash credit. Working out which route gives the better result is not always straightforward. Visit our dedicated R&D tax relief page for full eligibility and claims detail, or read the latest on R&D tax relief changes.

The Patent Box gives companies a reduced rate of Corporation Tax on profits from qualifying patented inventions. To qualify, a company must own or hold an exclusive license for a qualifying Intellectual Property (IP) rights and have made a significant contribution to developing it.

Importantly, Patent Box works alongside R&D tax relief, since the R&D that creates a patent can also qualify for relief in its own right. Without any R&D activity, the Patent Box relief would be nil.

Read more about our R&D tax relief and Patent Box support.

Most employers can reduce their employer National Insurance bill each tax year through the Employment Allowance, claimed through payroll software. It is not available to every business, most notably where the only employee liable for employer NICs is also a director.

Beyond the Employment Allowance, employer-focused reliefs also cover areas such as apprenticeship funding, pension contributions and National Insurance holidays for specific groups of staff.

Reliefs, exemptions and zero ratings reduce or remove VAT on specific goods, services or sectors, while business rates relief can reduce the rates for:

• small businesses,
• empty properties,
• charities and
• businesses in certain sectors or locations.

Property-related reliefs, including those linked to Stamp Duty Land Tax and capital allowances on commercial buildings, can also reduce the tax cost of buying, holding or improving business premises.

Speak to our VAT team about your specific position.

Companies working in film, television, animation, video games, theatre and other qualifying creative sectors can claim creative industry tax reliefs, which give an additional Corporation Tax deduction or payable credit on qualifying production costs. Other sectors have their own targeted reliefs, and eligibility and claim mechanics vary significantly between them. You can read our comprehensive guide on creative industry tax reliefs here.

Business Asset Disposal Relief reduces the Capital Gains Tax rate on the sale of a qualifying business, shares in a trading company or an interest in a trading partnership, up to a lifetime limit of qualifying gains of £1,000,000.

Holdover Relief enables qualifying assets to be transferred without an immediate CGT cost (or with a significant reduction), helping facilitate succession planning by deferring the tax until a future disposal of the asset via the recipient.

Rollover Relief enables businesses to defer CGT or Corporation Tax on the disposal of qualifying business assets where the sale proceeds are reinvested in replacement business assets – supporting continued investment and growth.

Enterprise Investment Scheme and Seed Enterprise Investment Scheme give investors income tax and Capital Gains Tax relief on qualifying investments, with more generous rates available through SEIS for smaller, earlier-stage companies. These reliefs are important for businesses looking to raise investment.

Agricultural Property Relief and Business Property Relief reduce or remove Inheritance Tax on qualifying farmland, farm buildings and business assets passed on during lifetime or on death. Recent legislative changes mean the position for many family farms and owner-managed businesses has shifted, particularly around the level of relief available on higher-value estates. See our Inheritance Tax planning page for current thresholds, or book a review of your succession plan.

Not sure which of these apply to you or your business? Book a tax relief review and we will map out where you could be missing out.

PRR exempts profits made on selling your home from UK CGT. Relief may be restricted if you only lived there for part of your ownership, or if you used any part of your home solely for business purposes.