What tax allowances and reliefs are available to your hospitality business?

19/02/2024

As the owner of a hospitality business, you will understand the importance of tax allowances and reliefs to help boost your growth as you scale up.

Our team will advise you on the best tax allowances and reliefs that are available to your business – and how you can utilise them to receive all benefits.

Capital allowances

Capital allowance represent a generous tax relief that can give your business the power to maximise your tax savings by offsetting the cost of investment in certain assets.

Any item of expenditure which has an “enduring benefit” to the business can qualify for relief – however, the eligibility criteria on allowable expenses differs from one scheme to the next so it is important you understand exactly what you are eligible for and seek expert advice if you are unsure.

Your hospitality business can claim capital allowances on various aspects such as:

Plant and machinery
Integral features
Costs linked to purchasing, construction, modifications, fitting-out, or refurbishments.

This is true for both owned premises and for buildings with a long lease.

The Annual Investment Allowance (AIA) now stands at £1 million per year – this allowance allows you to deduct 100 per cent of the costs of ‘plant and machinery’ you purchase from your annual taxable profit for the year, up to the annual limit.

If you spend more than the qualifying limit, additional expenditure will attract additional annual writing down allowance (dependent on the type of asset) – this currently stands at six per cent.

Perhaps you have not considered capital allowances because you believe your current accountant has it all in hand.

This decision can result in a loss of thousands of pounds of tax relief each year, which can be detrimental to your business – our team of professionals will help you get the financial benefits you deserve.

Retail, Hospitality and Leisure relief scheme

If your business is mainly used as a shop, restaurant, café, bar, pub, or other hospitality/leisure business, then you could qualify for retail, hospitality, and leisure relief.

If you are eligible, you could get 75 per cent off your business rates bills for the 2023/24 billing year.

The maximum you can get in relief each billing year is £110,000 per business.

Once you opt out, you cannot change your mind, so it is important you seek expert advice if you are considering dropping this relief.

So, how do you get retail, hospitality, and leisure relief?

As local councils manage business reliefs in your area, you will need to contact them to:

Check your eligibility
Find out how to get the relief
Check if you can get any other types of business rates relief on top of relief, hospitality, and leisure relief.

If you find you are not eligible for the retail, hospitality, and leisure relief, you might be eligible for another type of business rate relief.

For example, this will apply if you are a small business or are experiencing some financial difficulties.

Seeking advice from our experts will allow you to introduce the most beneficial reliefs to your business and increase its growth – contact us today.

Corporate tax allowances

If you are looking to boost your business, why not consider researching and including Corporation Tax in your financial strategies?

It is worth remembering that investment does not always lead to relief, and rather it could be items used in the normal functions of your business that are offset.

Corporation Tax applies to your business’s profits, meaning your taxes are paid on your taxable income.

You can deduct the costs of running your business from your profits before tax when you prepare your business’s accounts.

Anything you or your employees get personal use from must be treated as a benefit.

Some expenses (for example, entertaining clients) are not allowed for Corporation Tax – these must be added back to your profits when you prepare your Company Tax return.

Small business rate relief

If your hospitality business is just starting up or classed as an SME, you might be able to get small business rate relief.

You can get this relief if:

Your property’s rateable value is less than £15,000
Your business only uses one property

How much small business rate relief you get depends on your property’s rateable value.

If the rateable value is £12,000 or less, you will not pay business rates on the property.

For properties with a rateable value of £12,001 to £15,000, the rate of relief will go down gradually from 100 per cent to zero per cent.

If your circumstances change, it is crucial you report changes to make sure you are paying the right amount and do not get a backdated increase in your bill or overpay.

Changes can include your property becoming empty or the nature of your business moves to different premises.

Thus, the amount of small business rate relief you are eligible for might change – for instance, it might decrease if the rateable value of your property has increased.

For more information about small business rate relief, check out the Government’s website by clicking here.

If you would like to discuss the possible allowances and reliefs your business is eligible for, please get in touch with a member of our team today.