7 Surprising Ways Small Businesses in the UK Can Benefit from tax relief in 2025

Navigating taxes can be a real challenge, especially for small business owners in the UK. However, understanding available tax relief options can provide significant benefits. As we welcome 2025, there are fresh opportunities to help ease the financial load for small businesses. Here are seven surprising ways you can leverage tax relief this year.

1. Enhanced Capital Allowances

In 2025, small businesses can claim enhanced capital allowances for energy-efficient equipment. This means that if you invest in green technology—like solar panels or energy-efficient lighting—you could potentially deduct the full cost from your taxable profits. Statistics show that adopting eco-friendly practices not only attracts customers interested in sustainability but can also lead to energy cost reductions of up to 30% in the long run.

2. Small Business Rate Relief

If your business occupies a property with a rateable value below £15,000, you may qualify for Small Business Rate Relief. This relief can cut your business rates by up to 100%, giving you more freedom to allocate those savings to growth initiatives, marketing, or employee training. This support is especially beneficial for local shops and services facing pressure from high operational expenses.

3. Research and Development (R&D) Tax Credits

Many small businesses overlook the potential for R&D tax credits, which can apply even if your project doesn’t seem revolutionary. For instance, if your business is developing new software or designing a unique product, you could claim credits that might reduce your tax bill by up to 33% of your R&D costs. In 2023 alone, small businesses claimed over £6 billion in R&D credits, underlining the value of this opportunity.

4. Employment Allowance

In 2025, small businesses can benefit from employment allowance, which helps offset employer's National Insurance contributions. If you're eligible, you could save up to £5,000 per year. This relief is particularly valuable for startups aiming to hire more staff without straining their payroll budgets, leading to a potential 20% reduction in hiring costs.

5. Business Asset Disposal Relief

When selling qualifying business assets, small businesses can take advantage of Business Asset Disposal Relief. This allows you to pay a reduced capital gains tax rate of 10% on profits from asset sales—down from the standard 20%. For instance, selling business equipment for £50,000 could mean a tax saving of up to £5,000, which you could reinvest in your business to support further growth.

6. Tax Relief for Home-Based Businesses

If you're self-employed and operate from home, 2025 offers enhanced tax relief on home office expenses. You can claim a portion of household costs—like utilities and broadband—potentially saving hundreds of pounds annually. With remote work becoming the norm, this relief acknowledges the increase in costs associated with running a business from home.

7. VAT Exemptions

For small businesses with a turnover below the VAT registration threshold of £85,000, relief from VAT payments means avoiding the complexities and costs associated with VAT compliance. This simplifies your accounting and can save you time and money, enabling you to focus on growth strategies.

Final Thoughts

Understanding tax relief options can significantly boost the financial health of small businesses in the UK. By exploring these seven avenues, you'll not only streamline your operations but could also save considerably in 2025.

Tax regulations can feel overwhelming, but don't hesitate to explore how these potential tax reliefs can provide lasting benefits for your business. Making the most of available support may just lead to breakthroughs you hadn’t anticipated, ensuring your small business remains resilient and thriving.

If you think we can help your business, get in touch or call us at 0115 646 2003.