Small business owners could be losing out on vital income because they are not fully aware of business tax reliefs and the potential government allowances available for them to claim, according to a study.
Research from Direct Line for Business reveals 46 per cent of small and medium-sized enterprises (SMEs) have a ‘very poor’ understanding of the government tax relief available.
This amounts to nearly 3.5 million SMEs across the UK that may not be fully utilising the available tax benefits.
A further 18 per cent claim to have a ‘below average’ understanding of the business tax relief measures available to them.
Just 6 per cent of SMEs claim to have a ‘very good’ understanding of the range of tax relief measures and allowances available. A further 5 per cent say that they have an ‘above average’ understanding, while just under one in five (18 per cent) reveal that they have an average understanding.
Nick Breton, head of Direct Line for Business says, ‘This research highlights that there is a lack of awareness of the benefits available to small business owners which can ultimately impact the development and growth of their business.
‘The research shows SME owners do not know whether they are eligible for any tax relief measures, so we would encourage them to do some research and seek help if necessary to make sure they are taking full advantage of the benefits.’
Emma Jones, founder of Enterprise Nation adds that business owners are busy people, focused on perfecting their product, serving customers, and making sure the bills get paid.
‘This doesn’t always leave time for checking out the latest tax relief benefits. My advice is to find an accountant who can be your go-to person for understanding what’s best for the business from a tax and accounting perspective,’ she says.
When asked about specific tax relief measures, 15 per cent say they are eligible for capital allowances, 14 per cent are eligible for relief on corporation tax marginal relief and 13 per cent qualified for small business rate relief.
Some 7 per cent of SME owners state that they are not eligible for any tax relief measures, while more than a third (36 per cent) of respondents claim not to be aware of any of tax relief measures open to businesses.
Further reading on taxes
See also: Guide to pre-trading expenditure