Why Now Could Be The Perfect Time To Start A Business
If you have been seriously toying with the idea of starting a business, right now could be one of the best times to take the leap and go for it. 2017 was a ground-breaking year for start-ups and 2018 looks set to be even better. Over 5.7 million small businesses currently exist in the UK, collectively responsible for a £1.4 trillion turnover. Right now, there are plenty of incentives and schemes for entrepreneurs starting out and benefits for those who invest in them. Which ones could benefit your start-up or potential start-up depends on the type and scale of business you are undertaking or intend to.
These are elected areas across England in which the Government provides support and tax reliefs to businesses that operate within them. If your business locates in an enterprise zone you could receive the following benefits:
- Up to 100% business rate discount worth up to £275,00 per business over a 5-year period.
- 100% enhanced capital allowances to businesses making investments in plant and machinery on 8 zones.
- 100% retention of business growth for Local Enterprise Partnerships, to enable them to fund development in enterprise zones.
Key industries that if your business operated within that can benefit from Enterprise Zones include; the automotive, aerospace, pharmaceutical and renewable industry sectors.
For more information on whether Enterprise Zones and its benefits could advantage your start-up business check out this link.
Seed Enterprise Investment Scheme (SEIS):
This scheme was designed to help small, newly trading companies receive the funding they require to grow and succeed. SEIS works through providing attractive tax reliefs to investors in return for their investment within start-up companies. The scheme is seen as a ‘must’ for any entrepreneur seeking funding during early stages of their businesses development. Key pointes about the scheme are:
- Start-ups can raise £150,000 in overall SEIS investment.
- To qualify you must be a UK based company with under 2 years of trading, have assets below £200,00 and less than 25 full-time employees.
- Investors can invest £100,000 in a tax year which can be spread over more than one company. In return they can receive tax relief on up to 50% of the invested amount and providing they hold the shares for 3 years they are then exempt from capital gains tax.
If you think you could qualify for SEIS at Sleek we are experts. Get in touch for more information and help with securing your SEIS advance assurance and SEIS investments.
Enterprise Investment Scheme (EIS)
Like SEIS, the Enterprise Investment Scheme was designed to help smaller, higher risk companies raise funding. Under EIS rules a company can raise up to £5 million per year with a maximum of £12 million in the company’s lifetime. Investors can raise up to £1million per person per year and in return can receive a tax relief of 30% of the invested amount. Again, the shares must be held for 3 years to qualify for capital gains tax relief. Much like with SEIS the government have recognised that newly trading companies can often face substantial difficulties in raising relatively small quantities of share capital. These schemes are here to provide a way for small businesses to over come this issue.
Research & Development Tax Credits
If your company undertakes research and development, then you could qualify to receive R&D tax credits. R&D tax credits can be used to either reduce your tax bill or increase your taxable losses. This means that if your company makes a loss on R&D expenditure you can either ‘surrender’ or ‘cash-in’ these losses. HMRC will then ‘repay’ the surrendered loss as a cash tax credit. Most companies fall into the SME (Small- medium enterprise) category, which means you claim back up to 33p for every pound spent on R&D, regardless of whether your business is making profit or a loss.
To qualify for R&D tax credits your research project must relate to the company’s trade. The company also needs to fulfil the following by:
- Looking for an advance in science and technology.
- Having had to overcome uncertainty.
- Tried to overcome this uncertainty.
- The uncertainty couldn’t have been easily worked out by a professional in the field.
Once your business is successful and you decide to sell it, you may be eligible to pay less Capital Gains Tax, through entrepreneur’s relief. With entrepreneur’s relief if you are a director that owns 5% of more of the company, you can be eligible to pay 10% tax on all gains on assets that qualify, as opposed to the normal 28% rate. This is valid up to a maximum lifetime limit of £10 million. The relief is also available to sole traders and partners who are sell or gift the whole or part of their business. Though, to qualify to claim relief you must satisfy several conditions throughout a ‘qualifying period’. The specific conditions you must satisfy will however, depend on the type of disposal of your business you have made.
There is plenty of help available to companies starting out. The UK is supporting entrepreneurs now more than ever, through schemes such as the above and even more (crowdfunding, peer to peer lending etc). At Sleek we are experts in start-up investments.
Contact us for more information and to find out how we could help you and your business have the best start.