There are a number of different tax incentives to benefit growing businesses and reward those who make a success of them. You should aim to claim all the reliefs that you are legally allowed to use. These may include:
Capital allowances. Businesses can claim a capital allowance against certain expenditure on cars, tools, machinery, equipment, research and development and other items.
investment scheme. This scheme provides tax relief to investors in certain types of small, unquoted companies.
Patent box. From 1 April 2013 a reduced 10% rate of corporation tax will apply to profits attributed to patents.
Controlled foreign companies relief. Relief is available for foreign taxes that the controlled foreign company has paid.
Entrepreneur's relief. This is available to company directors and employees who hold 5% or more of the shares of the business for at least 12 months. If they sell the shares,the tax rate will be just 10% on the gain - limited to the first £5m of gain over their lifetime.
Corporation tax. If you're a sole trader with a turnover of more than £50,000, it will probably be more tax-effective to operate as a limited company. Companies with profits of less than £300,000 pay corporation tax at the small profits rate of 20%; companies with greater profits pay the main rate of corporation tax, which is 24% in 2012/13, 23% in 2012/13 and 22% in 2013/14.