Being a small and medium-sized enterprise (SME) has its perks; there are a number of tax benefits available, some of which have proved very useful.
Unfortunately, many SMEs lack a knowledge of the benefits available to them which results in them unfairly missing out on what they’re entitled to. While there are many different tax advantages out there, here are three key tax benefits to consider:
Enterprise Investment Scheme
If your business is looking to secure investment, the Enterprise Investment Scheme (EIS) might be for you. The EIS allows you to offer tax relief to your investors, this is beneficial to your business as it will inevitably make your business more appealing to potential investors, drawing in greater numbers.
Should your business qualify for this scheme, investors are eligible to claim a tax relief of 30% on purchase of new shares up to £1 million of investment. In addition to this, The Seed Enterprise Investment Scheme (SEIS) could provide a further tax advantage, enabling investors a tax relief of 50% on up to £100,000 of investment.
This scheme was first introduced in 2014 and is intended to make it easier for SMEs to hire new employees by reducing the financial burden associated with recruitment. This scheme has the potential to completely remove employer National Insurance expenses for the large majority of small businesses.
Figuring out if you’re eligible for Employment Allowance couldn’t be simpler! If the amount of employer National Insurance you pay is usually under £3,000 per year, then you are eligible.
The Patent Box Scheme
The Patent Box Scheme has the potential to entitle you to a reduced rate of corporation tax on some of your profits. For some reason or other, this scheme has never reached the popularity we think it deserves.
The Patent Box Scheme applies to small companies that make some or all of their profits from patented products. If your business holds patents for any of the products it sells, you could be eligible for the advantageous 10% corporation tax rate. Under this scheme, you will receive this special rate on all profits earned on your patented products.