Benefits that UK startups should know about
Starting a business in the UK comes with many challenges, but one area where entrepreneurs can gain support is through various government benefits and incentives. These schemes are designed to ease the financial burden on startups and help them grow.
From employment allowances to research and development credits, here are some key benefits UK startups should be aware of:
1) Employment Allowance
The Employment Allowance lets startups reduce their annual National Insurance bill by up to £5,000. However, businesses with National Insurance liabilities over £100,000 in the previous year are ineligible. Public sector companies (e.g., councils or NHS) cannot claim unless they are charities.
Tip: Some payroll softwares, such as PayCaptain, can allow you to claim it directly through features like payroll reporting.
2) Small Business Rate Relief
Small Business Rate Relief (SBRR) offers financial support for startups with physical premises. Businesses with property values under £15,000 may receive reduced or even full exemption from business rates. Properties below £12,000 usually get full relief, cutting operational costs and providing a boost for early-stage companies.
3) Research and Development (R&D) Tax Credits
Startups involved in innovation can benefit from R&D Tax Credits, a government incentive allowing companies to reclaim a portion of their R&D spending. This applies to a range of activities, including engineering, software, and technical development.
Tip: Businesses can claim back up to 33% of qualifying expenses, making it a valuable resource for tech startups and innovators.
4) Seed Enterprise Investment Scheme (SEIS)
The Seed Enterprise Investment Scheme (SEIS) encourages investment in new businesses by offering tax relief to investors, making startups more attractive for funding. Under SEIS, individual investors can claim up to 50% income tax relief on investments of up to £100,000 per tax year. This makes it easier for startups to secure funding, which is often a hurdle in the early stages of growth.
5) Start-up loans
For businesses needing initial capital, the Start-Up Loans programme offers government-backed loans of up to £25,000 at a fixed interest rate of 6%. Unlike other forms of credit, a Start-Up Loan comes with 12 months of free mentoring, helping entrepreneurs navigate the complexities of running a business.
Tip: The loan must be repaid over five years, and there are no early repayment fees, making it a flexible option for cash-strapped startups.
6) Patent Box
Startups with intellectual property (IP) assets should explore the Patent Box regime. This scheme allows companies to pay a reduced rate of corporation tax (10% instead of the standard 19%) on profits earned from patented inventions.
Tip: By incentivising innovation, the Patent Box is especially beneficial for startups in industries like pharmaceuticals, engineering, and tech.
Final thoughts
Navigating the world of government benefits can be tricky, but taking advantage of the schemes available can give your startup a significant head start. Whether through employment support, tax relief, or investment incentives, understanding these benefits can help you maximise your resources and grow your business more sustainably.
For more information on these schemes, visit gov.uk and ensure your business isn’t missing out on valuable financial support.
