There are many tax exemptions and reliefs that business owners can avail of with a little planning.
As a business owner, how often do you currently reflect on and review your business to see that it is structured and optimized to be as lean as possible? It is fair to say, there is a temptation to often become immersed in everyday operations of the business, with the result that tax exemptions and reliefs can be overlooked. Here are some examples of commonly missed opportunities that can be helpful for business owners to consider for significant tax saving potential.
When companies choose to “go green” they can make significant tax savings, as well as helping the environment! Some options include:
- Choosing fully electric vehicles. There is currently a complete exemption from Benefit in Kind for companies who choose to provide fully electric vehicles for directors or employees with a value of up to €50,000, with the result that both the employee and the employer achieve significant tax savings through the company’s payroll.
- The Cycle to Work Scheme also allows for savings to be made through providing bikes and bike equipment for staff or company directors without tax implications – this can result in savings of up to 52% on the retail costs incurred.
- An Accelerated Capital Allowance (ACA) tax incentive is available for the cost of purchasing energy efficient equipment and products for use in the business.
Corporate Gift Vouchers
Issuing gift vouchers to directors or employees, in place of cash bonus or incentive schemes, can provide saving which should be considered annually. These vouchers are exempt from income tax up to a maximum €500 value per person per annum.
Claiming Personal Expenses
In many cases, business owners do not properly record and recover all of the expenses that they incur personally for the business. These may include home office costs, motoring costs, client entertainment costs, or use of personal equipment/assets by the business. Often these costs can add up to a significant amount that can be paid over to a business owner tax free on an annual basis
Research and Development Tax Credits
A valuable tax credit is available to businesses investing in Research & Development. The tax credit can amount to 25% of qualifying expenditures, and, uniquely, the R&D tax credit is refundable so it can result in a business securing payments from the Revenue Commissioners (always great to see payments going in that direction!). Business owners are often surprised at the quantum of their costs that can qualify for this relief – this is an area that can yield very substantial benefits to a business.
Companies developing new products should also be aware of the lower tax rate available via the “Knowledge Development Box” relief that allows for a lower 6.25% rate of Corporation Tax to apply to certain qualifying profits.
Employment of Family Members
Where family members are actively involved in the business, (e.g. assisting with administration, marketing or any other aspect of the business), there may be a tax advantage to registering them as an employee of the business and including them on the business payroll.
Naturally, different opportunities will arise for different businesses. The items listed above only represent a brief overview of some common “day-to-day” tax planning considerations encountered in my practice. The above should not be relied upon as financial advice, and specialist assistance from a qualified professional should be sought by every business owner in order to ensure that all aspects of their business are structured optimally.