As a UK company, you are required to pay corporation tax on your taxable profits. These are your total profits, minus business expenses that can be claimed as tax relief.

However, it is important to note that not all expenses incurred by your business can be taken off of your taxable profit. In this blog post, we will be discussing which expenses can and cannot be claimed as tax relief, and other kinds of tax relief available to UK companies.

Expenses that can be claimed

The following expenses can be claimed as tax relief, provided they are incurred wholly and exclusively for the purposes of your business:

  • Cost of goods sold: This includes the direct cost of any products or services sold by your business.
  • Wages and salaries: This includes payments made to employees, including bonuses and benefits.
  • Rent and rates: This includes the cost of renting business premises and business rates paid to the local council.

  • Capital expenditure: This includes the cost of purchasing fixed assets, such as property, cars, and machinery. These costs are claimed through capital allowances, and tax relief may have to be claimed over several years depending on the asset.
  • Travel expenses: This includes the cost of business travel, including train fares, mileage allowances, and subsistence expenses.
  • Repairs and maintenance: This includes the cost of repairing and maintaining business assets.
  • Marketing and advertising: This includes the cost of advertising your business and any marketing materials produced.
Which expenses can UK companies claim tax relief on?

Expenses that cannot be claimed

The following expenses cannot be claimed as tax relief:

  • Personal expenses: This includes any expenses not incurred wholly and exclusively for the purposes of your business.

  • Fines and penalties: This includes any fines or penalties imposed on your business.

Other kinds of tax relief available in the UK

Aside from claiming expenses, there are other forms of tax relief available to UK companies:

 

  • Research and Development (R&D) tax relief: This relief is available to companies that are carrying out research and development activities. The relief can be claimed as an additional deduction from taxable profits or as a cash payment.
  • Patent Box: This is a scheme that allows companies to apply a lower rate of corporation tax to profits earned from patented inventions.
  • Enterprise Investment Scheme (EIS): This is a scheme that provides tax relief for investors who invest in qualifying small and medium-sized companies.

When is corporation tax due?

The deadline for UK corporation tax returns and payments depends on the company’s accounting period. This is the period that their tax return will cover.

Generally, companies must file their tax returns within 12 months of the end of their accounting period. For example, if a company’s accounting period ends on 31 December 2021, its corporation tax return and any tax due must be filed and paid by 31 December 2022.

However, the deadline for actually paying your corporation tax bill is considerably earlier. Corporation tax payments are due nine months and one day from the end of your accounting period.

Need Assistance from an Accountant?

In conclusion, it is important to note that not all expenses incurred by your business can be claimed as tax relief. However, by understanding what expenses can be claimed, and by taking advantage of other forms of tax relief available, you can reduce your company’s corporation tax liability.

If you are unsure about what expenses can be claimed or what other forms of tax relief are available, it is recommended that you seek professional advice from a qualified accountant.

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.