YOUR BUSINESS SPRING 2019 - 74

Tax solutions

than a year and was previously used
in a diﬀerent capacity, you may be
eligible for 100% tax incentive on any
renovations you carry out. This scheme
is ideal for any business that plans
to bring an abandoned warehouse or
shop back to life. It can't be used to
refurbish an existing oﬃce space.

Patent box relief

Companies are allowed to apply a
lower rate of corporation tax to those
proﬁts earned from patents. The
relief operates as a deduction from
taxable proﬁts, which means that in
certain circumstances companies
with taxable losses can beneﬁt too.
Relief is available for every year
in which the company owns, and
generates income from, qualifying
intellectual property. As patents
have a life of 20 years, the total
relief can be extremely valuable.

Research and development

Companies that spend money
developing new products, processes
or services - or enhancing existing
ones - are eligible for a cash
payment and/or corporation tax
reduction. R&D tax credit rates
are the equivalent of up to 33p for
every £1 of qualifying expenditure.
They can be used as an alternative
to innovation grants, and in some
cases can complement them.

Enhanced capital allowance

Businesses that purchase energysaving plant or machinery can beneﬁt

74

from single-year capital allowances.
The enhanced capital allowance
(ECA) allows 100% of the cost of
qualifying plant and machinery to be
written oﬀ against taxable proﬁts.
When you buy a company car, van
or lorry with low CO2 emissions,
water-saving equipment and many
other products that save energy,
you can take advantage of this tax
break - until April 2020, anyway,
when the ECA is being scrapped.
If you're a sole trader or partner
and have an annual income of
£150,000 or less, you may be
able to use a simpler system
known as cash basis instead.

Employment allowance

If you have any employees, this
allowance can reduce the amount
of national insurance you have to
pay each year by up to £3,000.
It works by you "claiming"
the allowance each month
through your payroll
process, as your national
insurance contribution
(NIC) liabilities arise.
It means no NICs
are payable until your
company's entire £3,000
allowance has been used
up. In some cases, a
company can eliminate
its employer's NIC bill as
a result. However, you
can't claim the allowance
if your company only has
one employee/director.

Take credit for it

Simon Bulteel, Cooden Tax
Consulting's managing director,
takes a closer look at some of
the more unusual tax credits
Research and development
tax credits are a tax relief that
supports innovation. If a company
is creating an advance in science or
technology - creating or improving
a product or a service - they are
eligible. Innovation is expensive
and R&D tax credits offer up to
33.35% of the eligible costs of
innovation back to the company.
There are many other tax breaks
for SMEs. As well as patent box
relief, which is a follow-on tax
relief for companies applying for
a patent after their R&D, there
are creative industry reliefs for
video games, films, high-end
television, animation, theatres
and orchestras. For companies
looking to raise investment, there
is also EIS and Seed EIS, which
the company registers for but
offers tax relief to the investor.
Cooden Tax Consulting is a tax
consultancy supporting innovative
businesses with research and
development tax credit claims,
patent box and video games tax
relief, which gives us a significant
level of expertise to support
SMEs and their accountants.
YOUR BUSINESS SPRING 2019

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