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How much can you cut your corporation tax bill?

How much can you cut your corporation tax


The 2015/16 tax year will see the main rate of corporation tax rate cut by a percentage point to 20%. Announced during the 2013 Budget, the move will result in the UK having the lowest corporation tax rate in the G7 and the joint lowest in the G20.

There is no doubt that this will be a welcome boost for UK businesses, but what other corporation tax reliefs are there to take advantage of?

R&D relief

The Small and Medium-sized Enterprise Scheme allows your company to claim a 225% corporation tax relief on qualifying R&D expenditure if it has:

·         fewer than 500 employees; and either

·         a turnover that does not exceed €100 million; or

·         a balance sheet less than €86 million.

In order to be eligible, your R&D project must relate to your business's trade and either resolve a problem in or contribute to a technological or scientific field.

Examples of expenditure you can get tax relief on include:

·         staff costs

·         wages for subcontractors

·         money spent on resources such as equipment and energy.

Marginal relief

You may be able to get marginal relief on your corporation tax bill if your profits are between £300,000 and £1.5 million. This acts as a bridge between the two tiers of corporation tax: 20% paid on profits under £300,000 and the 21% on profits over £1.5 million.

Speak to one of our advisers to find out how much marginal relief your business can claim.

The Patent Box

You can apply to get a 10% reduction on profits made on patented inventions through the Patent Box scheme.

In order to qualify for the scheme you must:

·         own the rights to a patent granted by the UK Intellectual Property Office, the European Patent Office or specific countries in the European Economic Area

·         have made a profit from your patented invention

·         have been involved in its creation

·         pay corporation tax.

You can apply for the reduced corporation tax rate through your tax return or by writing a letter to HMRC.

Talk to the experts

From minimising your corporation tax exposure to filing your returns on time, our accountants will ensure your business handles corporation tax with maximum efficiency. Contact us on 01628 631 056 or email geoffk@knightandcompany.co.uk to learn more about our corporate tax planning service.