Tax doesn’t have to be taxing

Let’s talk tax. We know, with everything in life there seems to be some form of tax, so how do you get some relief?

In the world of tax in business, failing to prepare is preparing to fail, so it is important to plan ahead. Do you know all the tax relief opportunities out there available to you? If not, here is a run down of what can be available:

Roll Over Relief

This is a great way to defer paying Capital Gains Tax. How does this work? Simply put, businesses are able to defer tax on gains when particular assets are disposed of. If you acquire other assets that amount to the same cost as old assets, tax on the gain can be postponed until the new assets are disposed of. Reinvestment is key here.

Hold Over Relief

Often known as Gift Relief, Holdover Relief is a deferral of Capital Gains Tax. This means that chargeable gain is not taxed when it occurs and is instead “held over” until the asset is disposed of. This relief is very useful for families wanting to pass down a business to future generations.

Entrepreneurs Relief

Entrepreneurs’ Relief is a Capital Gains Tax relief available to those selling or giving away their business. This one can be a little confusing as it’s not actually a relief, it simply reduces the amount of Capital Gains Tax paid on the disposal of qualifying business assets.

Research & Development Tax Relief

This is where UK businesses are rewarded for investing in innovation. Many businesses aren’t aware of this or simply do not think they are eligible, but this is an opportunity not to be missed.

As with any relief there are qualifying conditions and it can be hard to know whether you are in fact eligible or not. PBT can check what relief your business is eligible for and get the wheels in motion for you to make the most of every tax relief opportunity available to you.

There are also considerations that need to be made when a business makes a loss. Naturally no business wants to make a loss, however should this happen there are ways in which you can utilise the loss to your advantage.

Trading losses can occur from adjustments made to your profit calculation, turning an accounting profit into a trading loss for tax purposes. This trading loss effectively can reduce the tax you pay. There are 3 ways to utilise the loss:

  1. Current year claim

You can use the loss in your current year claim against all other profits, however it is important to bear in mind that this is on an all or nothing basis

  1. Carry back claim

You can carry the loss back against all other profits made in the last 12 months, again it is important to note that this is on an all or nothing basis

  1. Carry forward

You can carry any remaining loss forward to the following year and off set it against the first available future trading profits

Most companies want to use the loss in the earliest period possible and so it certainly makes sense to approach the management of your loss in order from 1 to 3, as it will also help with cash flow.

If you are still unsure or simply want to see if there is something that your business is missing out on when it comes to tax, then get in touch with us today. Our resident tax experts are waiting to help you see that tax doesn’t have to be taxing!

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