Tax Incentives

Enterprise Investment Scheme (EIS)

Offered by HMRC, the EIS incentive helps to promote small business investments in the UK.

By offering tax relief to investors who purchase shares in qualifying companies, it encourages them to invest in start-ups and early-stage companies, despite associated risk.

A number of criteria must be met in order to qualify for EIS tax relief.

Seed Enterprise Investment Scheme (SEIS)

The SEIS incentive encourages equity investments into start-ups by offering shareholders income tax relief of up to 50%, as well as Capital Gains Tax (CGT) deferral.

The goal is to stimulate growth, innovation, and job-creation in small, early-stage companies in the UK.

Eligible businesses must have 25 employees or less and an annual turnover of under £200,000.

These small start-ups may also be eligible for Innovation Tax Relief or R&D Tax Credits to provide further financial support.

The Patent Box

Designed to encourage innovation within the UK, this government initiative provides a reduced rate of corporation tax (10%) on income generated from patented inventions or products which make use of them.

If a company registers for a patent with the Intellectual Property Office (IPO), they can also submit supporting evidence to demonstrate their eligibility for this initiative.

An additional benefit of the Patent Box is that businesses can also apply for other forms of tax relief such as R&D Tax Credits, allowing them to reduce their overall taxation burden by claiming a percentage of expenditure related to research and development activities as a tax-deductible expense.

Research & Development (R&D) Tax Credits

R&D Tax Credits is a tax relief scheme for companies carrying out innovative projects that overcome technical or scientific uncertainty and more creative businesses are entitled to access these than you might appreciate.

The relief allows companies to reduce their tax bills significantly and claim up to 230% in additional R&D Tax Credits.

This applies only to small or medium sized businesses and has two tiers; corporation tax relief at the nominal rate in the claimant period, as well as a payable tax credit on any subsequent losses generated through R&D.

The RDEC scheme, meanwhile, applies to large companies with more than 500 employees who cannot claim under the SME scheme. This offers a payable credit.