SME’s are missing out on £m’s of tax reliefs

Recent research from Direct Line and Enterprise Nation suggests that SME business owners are losing millions in unclaimed tax reliefs.

The research suggests that:

· Almost half of business owners have a poor understanding of the range of tax reliefs available.

· Two thirds are unsure of the tax reliefs that they can claim.

· One third are unaware of any existing tax relief measures.

· Only six percent of business owners have a “very good” understanding of tax reliefs.

Further details can be found at:

Our view

Our general feeling is one of agreement, as we meet with many new client’s who aren’t aware of certain tax reliefs or worryingly are relying on their accountant who also isn’t aware of some tax reliefs.

Some recent instances where we have saved new clients significant sums of tax (for current and previous years) include:

· Tax relief claimed for mileage allowances paid at less than HMRC rates.

· Higher rate tax relief claimed for pension contributions and gift aid donations.

· Tax relief claimed on interest paid to a bank where the loan was used to invest in their business.

· Consideration of remuneration policy and paying dividends instead of large salaries.

· Claiming capital allowances on embedded electrics, plumbing and heating within the fabric of an actual building.

· Claiming tax reliefs for expenditure on technological or scientific advances under the HMRC approved R&D tax relief scheme.

The latter relief is a relief which is significantly under-claimed in the North East and Yorkshire. Too many companies (and their accountants) make the mistake of believing that the relief only applies to those working in a laboratory on the latest wonder drug but a lot of companies creating new technologies or solving problems with existing technologies are missing out on R&D tax relief.

The relief is such that for every £10,000 spent on qualifying expenditure (usually employee wages, materials, software costs and energy), HMRC will give a further deduction of £13,000 meaning that the company can offset £23,000 against taxable profits even though it has only spent £10,000. If the company is loss making, HMRC will even allow you to give up some losses and receive a cash payment !

There are many more legitimate reliefs available for each of the various taxes – income tax, VAT, capital gains tax, inheritance tax, stamp duty, stamp duty land tax, corporation tax, national insurance and so forth. If you wish to discuss your business or personal tax affairs, please contact a member of our tax team today on the following numbers:

Darlington – 01325 349700
Durham – 0191 3842244
York – 01904 784400