What is a tax break?

A tax break is a reduction is the amount of taxes a business or individual is required to pay. It is a form of financial relief provided by the government in the form of deductions, credits, exemptions and exclusions.

They are designed to encourage those who receive them to spend this surplus on buying a house, investing in and growing their business or on products and services which boosts the economy.

Individual who receive a tax break commonly include a deduction in mortgage interest, medical expenses and charitable contributions. This lowers their taxable income, reducing the overall tax owed.

For businesses, they can receive deductions for business expenses, credits for research and development as incentives to invest is sectors.

Claiming a tax break could be even more beneficial this year as Labour will be increasing taxes by the next budget.

Is my business eligible for a tax break?

If you own a small business with a rateable value of less than £15,000 and operate from a single premise, you might qualify for a tax break. This financial relief is available to those who have made purchases with their own money specifically for their business. Claiming a tax break can provide crucial support, enabling small businesses to continue growing and thriving.

To be eligible, it's essential that the expenses are out-of-pocket and not reimbursed by an employer. Additionally, you must have paid taxes in the year you are claiming the break. If your employer has reimbursed you fully for these expenses, or if you have not paid any taxes within that year, you would not qualify for the tax break.

Receiving this kind of financial assistance can significantly ease the financial burden on small business owners, allowing them to reinvest in their business operations, expand their services, or improve their infrastructure. This support can be a vital component in fostering the growth and sustainability of small businesses which help to boost the economy as well as their local community.

 

What can I claim a tax break on?

  • Uniforms and tools including cleaning, repairing and replacing these.
  • Spending on a vehicle used to business purposes.
  • Business travel and overnight expenses including transport, accommodation, food and drink.
  • If your business requires you to pay for a subscription to an approved organisation.

 

How do I get a tax break?

When you file your self-assessment return with HMRC you will have the opportunity to claim a tax break within this process.

Alternatively, you can check the guidelines and claim through the UK government website.