Navigating the tax landscape in the UK can be tricky, but there are plenty of opportunities for employers to save money and invest in their businesses. In this blog, we’re giving a comprehensive rundown of key tax benefits available to companies in the UK that can help you cut costs and encourage growth.

Current income tax rates

In the UK, the income tax you pay each year depends on your income above the Personal Allowance and the tax band your income falls into. The current tax year runs from 6 April 2024 to 5 April 2025. The standard Personal Allowance is £12,570, the income you don’t pay tax on. Your Personal Allowance may be higher if you claim a Marriage Allowance or Blind Person’s Allowance, but it will be lower if your income exceeds £100,000. In the table below, the different tax rates per band are shown:

Allowances and schemes for employers

As an employer, navigating tax advantages in the UK can offer significant financial relief and support business growth. Below, you will find a detailed look at crucial allowances and schemes available to UK employers.

Employment Allowance

The Employment Allowance significantly relieves many employers by reducing their National Insurance bill by up to £5,000 each tax year. This allowance makes hiring new staff more affordable, helping you expand your team without breaking the bank. You can claim this allowance if your employer’s Class 1 National Insurance liability is less than £5,000 a year, lowering your payroll expenses.

Research & Development (R&D) Tax Credits

If your company invests in research and development, the UK offers substantial R&D tax credits for small and medium-sized enterprises (SMEs) and larger companies. These credits can offset a significant portion of your R&D expenses, making it easier to innovate and stay ahead of the competition. By claiming R&D tax credits, you can reduce your Corporation Tax liability or receive a tax credit payable in cash.

Apprenticeship Levy

The Apprenticeship Levy is designed to fund apprenticeship training and support workforce development. Large employers pay the levy but can use these funds to train apprentices, enhancing their skills and contributing to the business’s growth. Smaller employers receive co-investment support, with the government covering a significant portion of the training costs. This initiative helps build a skilled workforce tailored to your needs.

Enterprise Investment Scheme (EIS)

The Enterprise Investment Scheme (EIS) aims to attract investment into startups and SMEs by offering tax relief to investors who buy shares in qualifying companies. This makes it easier for your business to secure the funding it needs to grow and succeed. EIS provides various tax reliefs, including income tax relief and capital gains tax exemption, encouraging investment in your company.

Patent Box Regime

The Patent Box regime allows companies to benefit from their innovations by paying a lower rate of Corporation Tax on profits earned from patented inventions and other specific innovations. This regime encourages companies to develop new technologies and ensures you get a tax break on your hard-earned intellectual property.

Creative Industry Tax Reliefs

Several tax reliefs are available for those in the creative sector. These apply to businesses involved in film, animation, high-end television, video games, and theatre productions. You can claim a payable tax credit, reducing the financial risk and encouraging further investment in creative projects.

Maximise tax advantages in the UK: The benefits of using an Employer of Record (EOR)

While these tax benefits are valuable, compliance with all the regulations can be challenging. That’s where a specialised Employer of Record in the UK comes in. An Employer of Record handles payroll and taxes, ensuring you comply with local laws and regulations. They help you maximise the tax benefits you’re entitled to while staying compliant, allowing you to focus on growing your business. Partnering with British Employer of Record can provide peace of mind and operational efficiency.

The UK offers a range of tax advantages that can help your business save money and invest in growth. Whether through Employment Allowance, R&D tax credits, or creative industry reliefs, there are plenty of ways to boost your bottom line. With the assistance of British Employer of Record, you can navigate these opportunities smoothly and efficiently, ensuring compliance and optimal financial health for your business. Contact us today!