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Tax reliefs you should know about as a start-up business

Embarking on the journey of forming a business from its earliest stages is both exciting yet demanding.

With a clear understanding of the vital role start-ups play in stimulating economic progress and encouraging innovation, the UK Government has launched an array of tax incentives and reliefs.

For aspiring entrepreneurs, being aware of these benefits can markedly improve your start-up’s fiscal well-being.

Seed Enterprise Investment Scheme (SEIS)

The SEIS is crafted to assist start-ups in securing equity finance by extending substantial tax reliefs to private investors who acquire new shares in these young companies.

Enterprise Investment Scheme (EIS)

Comparable to SEIS but intended for moderately larger businesses, the EIS provides tax reliefs for investors purchasing shares in a start-up.

Research & Development (R&D) Tax Credits

Many start-ups allocate a significant portion of their resources into research and development.

The Government provides R&D tax credits, permitting companies to reclaim part of their R&D expenditures against their corporation tax, even if they haven’t begun to turn a profit.

Business Asset Disposal Relief

Upon the decision to sell your enterprise, if you’ve been the owner for at least two years, you might be eligible for Business Asset Disposal Relief.

This relief lowers the CGT rate to 10 per cent on the initial £1 million of gains.

Patent Box

Innovative start-ups with patented products can take advantage of the Patent Box regime.

Companies may apply a reduced rate of Corporation Tax (10 per cent) to earnings derived from their patented creations.

Business Rates Relief

Specific start-ups, particularly those in retail, hospitality, leisure sectors or in rural locations, might qualify for a reduction in their business rates.

Local authorities administer this relief.

Employment Allowance

Start-ups may lower their National Insurance contribution by up to £4,000 using the Employment Allowance.

This can be especially beneficial for start-ups planning to enlarge their workforce.

VAT Relief

Start-ups boasting a turnover of under £85,000 are exempt from registering for VAT.

Those with turnover just above this level may take advantage of the Flat Rate Scheme, in turn making their VAT reporting less complicated.

For further guidance on tax incentives for start-ups, please do not hesitate to contact us.


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