Small businesses are the lifeblood of the UK economy, but with rapid inflation and other economic headwinds making trade difficult, they can struggle to access support.
There is a wide range of important tax reliefs available to SMEs, which could provide some much-needed financial assistance.
Employment Allowance claims
This scheme allows eligible businesses to reduce their National Insurance contributions (NICs) bills by claiming up to £5,000 each year of their NIC bill. This is available to employers if their Class 1 National Insurance liabilities were less than £100,000 in the previous tax year.
Super-deduction and Annual Investment Allowance
Businesses can cut their tax bill through the super deduction by up to 25p for every £1 they invest in qualifying equipment, which can include machinery, computers, most commercial vehicles and office furniture.
The temporary £1 million limit for the Annual Investment Allowance (AIA) has also been extended to the end of March 2023.
The AIA allows businesses to spend up to £1 million on qualifying business equipment, and deduct in-year its full cost before calculating their taxable profits.
Business rates savings
Any tax cut is welcome, which is why the retail, hospitality and leisure sectors, should take advantage of the 50 per cent business rates cut.
The Government says this is worth £1.7 billion for up to 400,000 eligible properties.
The business rates multiplier has also been frozen for another year. This is used to calculate business rates and usually rises with inflation each year, but for the coming year has been held at 49.9p and 51.2p, depending on the type of business.
There is further relief through green technologies, where there will be no business rates from April this year and eligible heat networks will also receive 100 per cent relief.
Big discounts on digital technology
Eligible businesses can receive a 50 per cent discount on buying new software worth up to £5,000 with the Government’s Help to Grow: Digital initiative, which also offers free impartial advice and guidance on the best technology to choose.
Its sister scheme, Help to Grow: Management, is 90 per cent funded by the Government and uses UK business schools and one-to-one mentoring to deliver business expertise on everything from leadership and financial management to marketing and digital adoption.
Claimants for both schemes must:
- Be based in the UK;
- Have actively traded for at least a year; and
- Have between five and 249 staff members.
Fuel duty savings for businesses
The Government has cut fuel duty on petrol and diesel by five pence per litre for 12 months.
The Government says that this represents a saving of £200 for the average van driver and £1,500 for the average haulier.
However, the reality is that many of these savings have been absorbed by fuel retailers who have continued pushing up the price at the pumps.
As a result, Boris Johnson has reportedly asked transport officials to draw up plans to target petrol stations that choose not to pass on the 5p fuel duty cut to customers.
According to reports in The Telegraph, Transport Secretary Grant Shapps has suggested a “pump watch” name-and-shame scheme, with Downing Street officials confirming that they “are considering mechanisms available to expose those companies that aren’t passing on tax benefits to consumers.”