Business Tax Planning Reliefs

In the first weeks of this pandemic, we saw many businesses concentrate on cash management, ensuring all available Government funding was utilised.

You may have received support from; the Job Retention Scheme, Deferral of VAT, Deferral of PAYE through Time to Pay, Business Rates Grants and Holidays and Business Interruption Loans.

Now, as we move from the response phase to the management phase, it is time to look at longer-term strategies to help manage your cash flow.

HOW WE CAN HELP

We can provide support in all areas of tax, allowing you to make informed decisions about your tax position with advice that delivers sustainable, risk-managed, effective tax strategies for the long-term.

At this time, some key areas to focus on are:

  • Time to Pay
  • R&D Tax Credits
  • Corporation Tax Repayments
  • Share Options
  • Raising Funds
  • Pension Schemes

Below we have detailed ways in which these tax reliefs can help strengthen your cash flow.

Formalise Time to Pay arrangements

You may have already deferred PAYE liabilities for 3 months however when those liabilities fall due in June, your business will face another cash squeeze.

For many, the solution will be to agree a more detailed Time To Pay arrangement with HMRC supported by a cash flow forecast, repayment plan and evidence other sources of funding have been exhausted.

R&D Tax Credits

This relief provides an opportunity for many to generate significant cash payments from HMRC.

The scope of R&D is much wider than traditional science and technology sectors; upgrading computer systems, efficiency improvements and product changes can all qualify.

Claims can be accelerated to help cash flow with a turnaround time of 6 weeks possible between starting work and receiving the cash payment.

Corporation Tax Repayments

In this current accounting period, many could find themselves in a loss-making situation.

Losses can be carried back and set off against profits of the preceding period providing the opportunity for repayments of last year's corporation tax even if the current accounting period has not ended.

Larger businesses may also have the opportunity to reclaim quarterly instalment payments already paid.

Share Options

An option scheme can provide a means to reward key employees without an immediate cash cost to the business, ensuring their loyalty through the crisis period. EMI arrangements have significant tax advantages for the option holder.

The exercise of most share options also results in an immediate corporation tax deduction for the company.

Raising Funds from Shareholders or Investors

Many may need additional funding to get through this current crisis.

Shareholder loans are one option as are further subscriptions for ordinary or preference shares from existing shareholders or new investors.

If qualifying conditions are met the equity subscription could qualify for EIS providing the investor with 30% income tax relief on the investment and capital gains exemption on the ultimate disposal.

Using Pension Schemes

Pension Schemes can be used in a variety of ways to support businesses through the crisis.

Some pension schemes can borrow to buy commercial property from the business providing a means of funding the company.

Alternatively, owners may want to access 25% of their pension fund tax-free to provide funds to support the business. Finally, in very specific circumstances, certain schemes can lend to companies.

GET IN TOUCH

If you would like to know more about these tax reliefs and how we can support you in strengthening your cash flow for the longer-term, please get in contact using the form below.

* mandatory fields

Your personal data is collected by Mazars in the United Kingdom, the data controller, in accordance with applicable laws and regulations. Fields marked with an asterisk are required. If any required field is left blank, it will not be possible to process your request. Your personal data is collected for the purpose of processing your request.

You have a right to access, correct and erase your data, and a right to object to or limit the processing of your data. You also have a right to data portability and the right to provide guidance on what happens to your data after your death. Finally, you have the right to lodge a complaint with a supervisory authority and a right not to be the subject of a decision based exclusively on automated processing, including profiling, that produces legal effects concerning you or significantly affects you in a similar way.

Want to know more?

Related Pages

R&D 1600_700 (1).jpg

R&D Tax Incentives

The UK government has, in the last two decades, introduced significant tax incentives to encourage companies to invest in R&D activities, creating valuable IP and providing skilled jobs.