There is no doubt that the last couple of years have been challenging for businesses, especially in the North East of Scotland. However, with the oil price rebounding in recent months and investment to diversify activities, there is hope that things are looking up.
Here, Azets Director Frazer Nicol discusses how valuable tax reliefs can benefit businesses and reveals how you can be smarter…
Aside from the grants and support offered by government, there are some valuable tax reliefs which are often overlooked by companies.
During these challenging years, where losses may have arisen, companies have several options on how to utilise these and a common choice is to carry these losses back to generate a cash repayment. Whilst this is beneficial from a short-term cash flow perspective, now is the time to consider the best way to utilise these losses given the Corporation Tax rate increase from 1 April 2023. If these losses are carried forward to periods after 1 April 2023, they can be worth 31% more and relieved at 25% instead of the historic 19%, which for many companies may be an attractive option.
Research and Development (“R&D”) tax relief is hugely beneficial for companies that are investing in innovation; however, it is often overlooked by qualifying businesses. Many businesses don’t consider that their day to day activities are innovative, but in reality, they are often overcoming challenges or making technological advances. For SMEs, relief is available at 230% meaning every £1 of qualifying expenditure provides an additional £1.30 in Corporation Tax relief. Larger companies can also benefit, but at a lower rate. There are some changes on the horizon for R&D tax relief and expert advice is recommended to ensure R&D claims are robust and have been carefully considered.
Significant benefits can be obtained for companies investing in property, plant and equipment. A 130% super-deduction will be available on qualifying assets until 31 March 2023.
Companies expanding internationally don’t often consider the tax cost of operating overseas. Overseas expansion can bring huge opportunities, but it does bring some tax and compliance challenges. Careful advance planning can help mitigate the potential tax cost of operating internationally.
The upcoming budget on 27 October will provide insight into governments plans for the coming years.
Azets’ team of trusted business advisors are on hand to offer strategic tax advice and planning. To discuss your business and efficient tax planning, contact: Frazer.Nicol@azets.co.uk