Tax Reliefs for Businesses and Individuals

1. R&D for SMEs 

To qualify, the business must have less than 500 employees and a turnover of less than £86million. They can claim relief equivalent to 130% of qualifying expenditure. If the business incurs a trading loss in the period in which R&D tax relief has been claimed, it can surrender all or part of that loss for a tax credit of 14.5% – vital cash for a business. 

2. Work From Home Tax allowance 

If your employer requires you to work from home, it has always been possible to claim for increased costs, but during the first lockdowns, the government launched a speedy way to access this tax relief (visit link above).

It’s possible to claim £6 per week, totalling £312 even if you worked from home for one day in the tax year 2020/2021 or the current one (2021/2022). 

You can claim up to £140 per year (if you are a tax payer in the rate of 45%) and it’s possible to claim two years’ allowance in the same request. 

3. Inheritance Tax(IHT) 

Is a tax paid by the estate of a deceased person and is based on the value of the estate plus recent lifetime gifts. Where a married person dies and leaves their estate to their spouse no IHT is payable, the surviving spouse may inherit the tax-free allowance from their deceased partner, effectively doubling the allowance which they may pass on. If the person is in a relationship, the best IHT advice would be to get married 

4. Gift aid Payments

Ideally, the person in the family with the highest marginal tax rate should be making the Gift Aid payments. Gift Aid payment is disclosed on the tax return and grossed-up donation is a reduction in taxable income and reduces higher rate tax liabilities. 

5. Income tax allowance 

The First £2000 of income is tax-free.  The first £1000 for basic rate taxpayers and the first £500 for higher rate taxpayers is tax-free. 

 For an owner of a company consider charging interest on loans to the business. Starting rate for savings £5000 applies only where taxable non-savings income (i.e., after personal allowances) is less than the starting rate for savings band.  It can benefit owner-managers who draw low levels of salary from their companies and pensioners in receipt of the state pension and a small amount of private pension income 

6. Rent a room relief (applied from Income Tax) 

Rent received from a lodger is free from income tax if below £7,500.  If the rent is shared, the limit is halved to £3,750 each 

 7. Marriage allowance (also applied from Income Tax) 

It is income tax relief for married couples and civil partners and allows the lower earner to transfer 10% of their personal allowance to their partner. Applies only when one person earns less than their personal allowance and the other’s earnings fall within the Basic Rate band. 

8. Property allowance (also applied from Income Tax) 

The first £1,000 of gross property income is exempt from income tax, ideal for occasional property income 

Contact your local AIMS accountant for more information on how to claim those tax reliefs and how they relate to your specific circumstances.