What is tax relief?
Definition of tax relief
If a day-to-day running cost of your business is "allowable for tax relief" or "allowable for tax", that means you can use it to reduce the amount of profit that your business will pay tax on. Not all day-to-day running costs are allowable for tax relief.
Capital allowances are also a way to claim tax relief because part or all of the cost of the asset can be used to reduce the amount of profit your business will pay tax on.
Examples of when tax relief can and can't be claimed:
- If you buy some stationery for your business, that cost is allowable for tax relief, so you can use it to reduce the amount of profit your business pays tax on.
- If you take someone other than an employee of your business out for a meal, that cost isn't allowable for tax relief, so you won't pay less tax as a result of that meal.
Knowing what expenses are allowable for tax relief
Check out this guide on allowable expenses for small businesses to find out more about what expenses and costs you can claim.
Disclaimer: The content included in this glossary is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this glossary. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.