The government and HMRC have introduced a number of tax reliefs to work as an incentive to entrepreneurs to keep their business’s growing and thriving. As a business owner or self-employed professional, you can experience huge benefits from understanding the different reliefs and credits you are entitled to.
Understanding how the tax system can work in your favour could not be more important, especially as we move towards a post-Brexit economy.
What is the difference between tax credits and tax deductions?
Tax credits are often regarded as superior, in terms of tax savings, to deductions. Credits are deducted from income before gross before-tax income is determined. Deductions are taken in the next step of the tax process, reducing the net taxable income.
Business Tax Credit and Deductions for ‘Going Green’
The government have introduced many incentives to encourage energy efficiency and being environmentally friendly. In addition to tax credits, you may also be eligible for tax deductions for changes made to your business facilities.
Examples of some ‘Going Green’ credits: Business Energy Tax Investment Credit
Research and Development Tax Credits
Research and Development tax credits have been introduced to encourage businesses to build and discover in their field. The PATH Act of 2015 includes some increased incentives- in the form of tax credits- for small businesses who use the R&D tax credit.
Alternative/Hybrid Vehicle Tax Credit
Individuals and businesses who buy and use a new hybrid or electric vehicle can take advantage of the Alternative Vehicle Tax Credit.