What Are The Best Tax Allowances and Reliefs for SMEs in 2025?

Monday, 7th of April, 2025

Running a small or medium-sized business in 2025? Then you'll want to make the most of every tax allowance and relief available to you.

At Pro Tax Plus Accountants, we believe that smart tax planning is one of the best tools for boosting profitability. Whether you're a sole trader, limited company, or partnership, understanding which reliefs apply to you can reduce your tax bill and free up cash to reinvest in growth.

Let's dive into the top tax-saving opportunities for UK SME's this year.

1. The Annual Investment Allowance (AIA)

   The Annual Investment Allowance allows you to deduct the full value of qualifying capital purchases - like equipment, tools, or machinery - from your taxable profits.

   
   

   Limit for 2025: £1 million

   This means you can invest in your business and write off the cost in the same year, rather than spreading it over time.

   
   

   Tip: AIA does not apply to cars, but it does cover things like computers, vans, office furniture, and more.

   
   

2. Corporation Tax Reliefs

   If you're operating as a limited company, make sure you're claiming all your allowable business expenses to reduce your profits before tax. This includes:

   
   

   - Staff salaries and National Insurance contributions

   - Marketing and advertising

   - Office rent, utilities, and insurance

   - Business travel and vehicle expenses

   - Professional fees (e.g. legal, accountancy)

   
   

   Corporation tax is currently 25%, so for every £1 you deduct in expenses, you could save 25p in tax.

   
   

3. R&D Tax Relief (Research & Development)

   If you're developing new products, improving processes, or creating innovative software, you might qualify for R&D tax credits - even as a small business owner.

   
   

   There are now two main routes:

   - R&D Expenditure Credit (RDEC) - for larger SMEs or companies receiving grants.

   - SME R&D Scheme - more generous, but the criteria are tightening in 2025.

   
   

   You don't need to wear lab coats to claim, many industries qualify, from food production to fintech!

   
   

4. Business Rates Relief

   If you operate from physical premises, you could be eligible for Small Business Rates Relief (SBRR).

   
   

   In 2025, if your property has a rateable value below £15,000, you may be entitled to 100% relief - meaning no business rates to pay!

   
   

   This is a major saving for retail units, offices, and co-working spaces.

   
   

5. Employment Allowance

   If you employ staff and your National Insurance liability is under £100,000 per year, you could claim the Employment Allowance.

   
   

   For 2025, the allowance is £5,000 - this reduces your employer NIC bill, making it cheaper to grow your team.

   
   

   You must claim through your payroll software or an accountant each tax year.

   
   

6. Capital Gains Tax Relief

   Selling a business or company assets? Don't forget about:

   
   

   - Business Asset Disposal Relief (formerly Entrepreneurs' Relief) - 10% tax rate on qualifying gains up to £1 million.

   
   

   - Rollover Relief - If you reinvest gains into new assets, you can delay paying CGT.

   
   

7. Super Deduction Replacement: Full Expensing

   While the Super-Deduction ended in March 2023, it's been replaced with Full Expensing for companies investing in plant and machinery.

   
   

   You can deduct 100% of the cost immediately, no more waiting years to get tax relief! This applies to:

   
   

   - Computers & IT systems

   - Office equipment

   - Plant, machinery, tools

   - Commercial vehicles (excluding cars)

Final Thoughts

Tax can be complex, but with the right advice, it becomes a tool to grow your business rather than a burden.

At Pro Tax Plus Accountants, we work closely with SMEs to ensure they're claiming every relief they're entitled to, staying compliant, and reducing tax liabilities where possible.

Ready to Save on Tax in 2025?

Let's chat about how your business can take advantage of these reliefs. Book a FREE consultation or DM us on social media!