How to Claim Corporation Tax Reliefs and Deductions

Team Nomi

Jun 20, 2025
5 minutes read

Corporation tax is a tax that companies and certain organisations pay on their profits during an accounting period. The amount of corporation tax you owe depends on how much profit your company makes from trading, investments, or selling assets. To reduce the tax you pay, you can claim various reliefs and deductions allowed by HMRC, which help lower your taxable profits and overall tax bill. 

Tax reliefs and deductions help reduce the amount of tax you need to pay. They cover a range of expenses and payments, such as pension contributions, business costs, donations, and investment losses. 

By understanding what you can claim and how to do it, you can lower your tax bill and even get money back if you’ve paid too much. We’ll explain everything in simple steps, so you can ensure you’re not paying more tax than necessary and can recover any money you’re owed.

What Are Corporation Tax Reliefs and Deductions?

Corporation tax reliefs and deductions are strategies that enable companies to reduce their taxable profits, and therefore the amount of tax they owe.

Reliefs are specific schemes or allowances (like R&D tax relief), while deductions refer to the ability to subtract certain business expenses from your income before calculating your tax bill.

Capital Allowances

Business assets, like machinery, equipment, and vehicles, are not deducted as expenses but qualify for capital allowances. This means you can write off the cost of these assets against your taxable profits over time.

• • Annual Investment Allowance (AIA): Provides 100% first-year relief on qualifying plant and machinery up to £1 million per year; available to most businesses except cars.
  • First-Year Allowances: From April 2023, 100% first-year allowance for new main rate assets; 50% first-year allowance for special rate assets like long-life equipment.
  • Writing Down Allowances: For expenditure over AIA limits or non-qualifying assets, claim 18% per year on main pool assets and 6% per year on special rate pool assets (e.g., low-emission cars, integral features).
  • Structures and Buildings Allowance (SBA): Allows a 3% annual deduction on the original cost of new, non-residential structures and buildings.

Company Cars and Special Assets

Capital allowances for company cars depend on their CO2 emissions. Zero-emission cars qualify for a 100% first-year allowance, allowing businesses to deduct the full cost in the year of purchase. 

Cars with low emissions receive writing-down allowances at 18% per year, while higher-emission cars qualify for 6% per year. These allowances apply only to cars used for business, with private use reducing the claimable amount.

Research and Development (R&D) Tax Relief

Research and Development (R&D) tax relief supports small and medium-sized companies (usually under 500 employees) on qualifying R&D costs for accounting periods before April 2024. 

From April 2024, schemes merged with updated rules. Claims require submitting an online Additional Information Form before the corporation tax return; failure to do so invalidates the claim.

The Patent Box Scheme

The Patent Box scheme lets companies pay a reduced 10% corporation tax rate on profits from patented inventions and related intellectual property, with an election required within two years of the accounting period’s end.

How to Claim Corporation Tax Reliefs and Deductions

Below are the steps to claim corporation tax reliefs and deductions:

Identify Eligible Reliefs and Deductions

Review the types of reliefs and deductions your company may be eligible for, such as:

• • Capital allowances on business assets like equipment, machinery, and vehicles.
  • Research and Development (R&D) Relief.
  • Patent Box for profits from patented inventions.
  • Creative industry reliefs (e.g., film, TV, animation).
  • Employment Allowance for reducing employer National Insurance contributions.
  • Trading losses and other specific reliefs like Disincorporation Relief.

Also consider allowable business expenses that can be deducted from profits, such as salaries, business rates, and operational costs.

Gather Supporting Information and Documentation

• • Collect detailed records and evidence for each claim, including invoices, receipts, contracts, and payroll information.
  • Ensure expenses are exclusively for business use and properly documented to satisfy HMRC requirements.

Prepare Your Company Tax Return (CT600)

• • Claims and elections for reliefs must be included in your Company Tax Return (CT600) or sent with it.
  • Clearly state the amount of the claim and provide sufficient detail describing what you are claiming.
  • For elections (choosing a specific tax treatment), specify the choice and the accounting periods it applies to.

Submit the Tax Return with Claims

File your CT600 with HMRC by the deadline, including all claims and elections. If you miss the deadline but are still within the amendment period, you can:

• • Submit an amended return, or
  • Write separately to HMRC requesting that the claim be treated as an amendment.

Be Aware of Time Limits

• • Most claims must be made within 4 years from the end of the relevant Corporation Tax accounting period.
  • Some reliefs have specific time limits; do not delay your claim to avoid losing eligibility.
  • Late claims may be accepted if you provide a reasonable explanation to HMRC.

These steps help ensure you correctly claim corporation tax reliefs and deductions, reducing your taxable profits and tax liability legally and efficiently. Effectively claiming corporation tax reliefs and deductions can reduce your company’s tax liability and improve cash flow. Don’t overlook these opportunities, maximising your claims not only saves money but also supports your company’s growth and long-term success.

If you are an accountant and your client wants to claim corporation tax reliefs and allowances, Nomi’s corporation tax software is the best option for you. With Nomi, you can prepare and submit your corporation tax returns directly to HMRC and Companies House, ensuring compliance and reducing errors. Try Nomi today with a free 30-day trial to see how it can support your company’s tax management.

Note: This article is for informational purposes only and does not constitute financial or legal advice.