What UK tax reliefs are available to companies?

As cost pressures continue to challenge business growth, understanding the tax reliefs available to companies has become essential. In this insight, Consilium Senior Tax Manager Duncan McKellar reviews the UK tax reliefs available to companies in 2025 and explains how Consilium Chartered Accountants can help companies maximise their claims.

As part of Consilium’s tax compliance process, we examine whether our corporate clients are utilising all UK tax reliefs available to them. This is combined with regular reviews and tax advice on how the business owner might best organise their affairs in a tax-efficient manner.

UK tax reliefs: what Capital allowances can companies claim?

The current capital allowances regime in the UK is particularly generous. For example, it has been possible to claim up to 100% tax relief in the year of purchase for many items of plant and machinery, such as computer equipment, servers and vans courtesy of the £1m annual investment allowance. Since 2018 an element of tax relief has also been available against trading profits on the cost of constructing or renovating structures and commercial buildings.

Recent updates to the capital allowances legislation have seen the temporary introduction of ‘super deductions’, followed by the permanent introduction of ‘full expensing’ relief on top of the existing regime of annual allowances and writing down allowances.   Full expensing claims can be made on the majority of plant & machinery purchases, assuming the asset is bought brand new, and is not a car.

The added reliefs do come with an extra layer of complexity. Therefore, Consilium’s review processes include advice on how to structure claims to maximise the potential tax relief.  

What UK tax reliefs are available for large capital expenditure programmes?

A key area of interest for many Consilium clients is large capital expenditure programmes. We work with clients early on in the process to ensure they are aware of the detailed provisions of the legislation relating to tax reliefs on large capital expenditures. This is particularly important as issues like the timing and financing of expenditures can impact a tax relief claim and its likelihood of success.

What UK tax reliefs are available for electric cars and charging points? 

UK tax reliefs on electric vehicles and charge points have long been a way of incentivising businesses to ‘go green’. For companies, the capital allowances available on brand-new electric company cars are particularly generous when compared to the rates available on internal combustion engine (ICE) and hybrid vehicles. Note the use of ‘brand new’ here as the rates for second-hand cars are not quite as generous. 

The company car benefit in kind rates are significantly lower than their traditional fuel equivalents, however, these rates are due to gradually increase in the coming years. That said, as there is a carve-out for electric cars from the salary sacrifice ‘Optional Remuneration Agreement’ rules (‘OpRA’), there are still sizable income tax and national insurance savings to be had by choosing to go electric. 

UK tax reliefs also apply to businesses buying zero-emissions goods vehicles relative to traditional ICE equivalents. Plus, the reduced VAT cost of using electricity as a fuel instead of petrol/diesel may also be attractive to many companies.  

Are there any UK tax reliefs on Research and Development (R&D) spending?

The research and development (R&D) tax relief regime is in a state of flux, with changes to both the rates and the method of relief for many business owners and their businesses. However, it still offers generous tax incentives for companies carrying out qualifying projects. 

To qualify for R&D tax relief, a project must seek an advance in a field of science or technology, and the company must already pay UK Corporation Tax. Consilium works with business owners to establish the evidence of such an advance, and then quantify the qualifying costs linked to the project.  

For accounting periods beginning before 1 April 2024, small and medium-sized enterprises (SMEs) can claim an additional deduction in their corporation tax computation for a set percentage of the qualifying spend. Loss-making SMEs have the option to surrender the R&D element of the losses for a payable tax credit or retain the loss for offset against other profits. 

Larger companies can use the ‘above-the-line’ R&D Expenditure Credit (RDEC) scheme to enhance accounting profits whilst claiming a reduction in their tax liabilities. 

For accounting periods starting from 1 April 2024, the two schemes have been merged into a single RDEC scheme for all but the most R&D-intensive companies. The changes to claims for SMEs may be significant and our Tax team is available to help business owners understand these changes.  

How can the Patent Box reduce Corporation tax on business profits?

The patent box regime offers a Corporation tax rate of 10% on profits earned from patented inventions. This relief is aimed at companies that own or have exclusively licensed patents or have undertaken qualifying development work on a patent. 

Once again, this legislation has many detailed provisions, which Consilium’s subject experts are on hand to guide you through. In particular, the patent box rate is not available on all of a company’s profits; therefore, calculating the profit on patent income is the foundation of any claim. 

What UK tax reliefs are available on Employer pension contributions?

The use of pension contributions as part of a tax planning strategy has been popular with businesses and business owners for many years. Corporation tax relief is available on employer contributions, but the timing of the contributions can impact the rate of Corporation tax relief. 

Again, like electric cars, pension contributions do not trigger the OpRA rules and can, therefore be used as a tax-efficient salary sacrifice arrangement for staff.

When considering Corporation tax relief on pension contributions, it is important not to ignore the income tax impact on the recipient. For many business owners, the corporation tax relief has historically had to be balanced against the pensions Annual Allowance (‘AA’) and the Lifetime Allowance (‘LTA’). The AA restricts the annual contributions (both employees and employers) that can benefit from income tax relief, whereas the LTA puts a cap on the total value of the pension pot, with tax charges arising when the cap is exceeded. 

From 6 April 2023, the LTA was largely abolished, and the AA limits were increased. This provided an additional scope for using pension contributions as part of a tax-efficient remuneration package.   

Further changes to the pension rules came in in 2024 affecting the availability of the 25% tax-free lump sum on retirement and the potential Inheritance Tax charges on pension pots. Given these changes, now is a good time to revisit plans for company-funded pension pots and consider if Wills and Succession plans are still appropriate.  

Tax expertise tailored to business owners

At Consilium, we specialise in supporting owner-managed businesses and entrepreneurs with expert Tax advice. We are trusted advisors to business owners, providing technical tax expertise and proactive insight to help them manage tax risks.

Consilium provides a comprehensive range of Tax services for businesses ranging from Tax planning and Tax compliance to VAT advisory and International tax.

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Duncan McKellar is a qualified Chartered Tax advisor and former Tax lecturer with the Institute of Chartered Accountants of Scotland (ICAS). Hugely experienced in the field of Corporate Tax compliance, Duncan manages a portfolio of business clients and provides expert insight on tax issues for owner-managed businesses.