For Scotland’s businesses, the Budget, whilst on the face of it didn’t provide much, has left the current crop of attractive tax saving opportunities and investment incentives untouched.
Fortunately the big ones – corporation tax, VAT, investment allowances, dividends, super allowances – remain untouched or have been subject to minor tweaking. As such it is broadly ‘Business Tax as Usual’.
Businesses need taxes to be clear and consistent and for once this Budget has more or less kept the goalposts in the same position, with a nod to further tweaks in the Autumn.
We now have a period of relative certainty in which businesses can take advantage of the range of incentives to help (1) improve efficiency (2) reduce costs (3) increase profits (4) drive growth and (5) help on the journey to net zero.
Listed below is a ready reckoner of the current crop of tax saving opportunities still available to Scotland’s vital community of SMEs and entrepreneurs. I urge SMEs and entrepreneurs to take full advantage.
130% Super Capital Allowances. This generous scheme has proven very popular, and whilst there may be a change in the future allowance, is still currently available. Businesses have until April 2023 to significantly reduce their tax burden by investing.
Recovery Loan Scheme – loans of up to £2m of which 70% is underwritten by the Government. It is available to businesses that have been affected by Covid restrictions and whose turnover is less than £45m. This remains in place until the end of June 2022.
R&D Tax credits. Whilst there is an overdue clamp down on unscrupulous 'providers' coming in the future, this is and remains a massive tax break with a hard cash refund. There are many business owners who are eligible but who have not yet claimed this relief.
Patent Box. For those businesses who have been granted a UK or EU Patent. This relief reduces profits to as low as 10% and with the corporation tax increase to 25% kicking in from April 2023, companies need to act now to take advantage of the patent box regime.
Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief). There has been a lot of chatter about the increase in capital taxes which have not come to fruition. This allowance allows certain businesses to dispose of shares, sell, retire or pass the company down to a future generation at a personal capital gains tax rate of 10%.
Employee Ownership Trusts. This has been increasingly popular with over 100 Scottish companies having taken advantage of this legislation. The bottom line is the 0% tax on sale of a business to your staff remains in place.
The employment allowance has increased to £5,000 for many small businesses which will benefit over 500,000 SME businesses. There are many business owners that have not yet claimed this relief. It should be noted that you have to apply to receive this allowance.
Business rates reductions remain in place for SMEs, although we will have to confirm the position with Holyrood.
Zero VAT for energy saving materials. This is a benefit for businesses selling in this sector as it improves the value proposition for the end user, for example, the installation of solar panels or heat pump systems.
Structures and Buildings Allowances. This allows businesses to deduct 3% of the cost of construction and renovation of non-residential structures and buildings.
100% allowance remains for zero emission cars. This is still highly attractive for businesses to put the company car back on the agenda. The ability to write off the cost of an electrical vehicle against profits, coupled with generous benefit-in-kind legislation has and will continue to be attractive for businesses.
Donald Boyd is a Partner and SME expert at Azets, the largest regional accountancy and business advisory firm to SMEs in the UK. For more information on how these tax saving opportunities could help your business, contact [email protected]