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.
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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.
Got questions? Ask Emily!
FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.