Top 9 Government Support for UK Startups
It’s an exciting and fulfilling journey to establish a business in the UK, though, difficulties come along with it. Luckily, the UK government understands how vital it is to encourage entrepreneurs and therefore there are many programs tailored for helping startups. This blog post will discuss the top nine ways the government has assisted new businesses in the UK including their advantages.
1. Start Up Loans
Scheme for Start-Up Loans provides people in the UK with government-backed unsecured loans amounting to up to £25,000 to start a business or expand it. They are repaid at an interest rate of 6% per annum and come with 12 months of mentoring and assistance.
Who can apply:
Citizens of Great Britain aged over 17 years who have a solid commercial idea but do not have access to conventional money sources.
Main advantages:
Reasonably priced financing, a chance to get mentorship, building a business credit history
Illustration. The Snaffling Pig Founders have used start-up loans to put up and develop their brand into an online success story after starting as a premium pork crackling company.
2. Seed Enterprise Investment Scheme (SEIS)
The Seed Enterprise Investment Scheme (SEIS) is meant to assist young, small companies in raising equity finance by giving tax reliefs to individual shareholders who subscribe for new shares of those firms.
Eligibility:
For a company to be eligible, it must be UK-based, have fewer than 25 workers, and encompass gross assets worth not more than £200000.
Key benefits:
Up to £100k invested into SEIS shares can qualify for a 50% income tax rebate per annum, besides any gains from the sale thereof being exempted from capital gains tax.
Example: In its early days, Perkbox, a leading employee engagement and benefits platform raised £2.5 million through the SEIS scheme which helped grow it very fast.
3. Enterprise Investment Scheme (EIS)
Enterprise Investment Scheme (EIS) is like SEIS but for more established companies where they give tax incentives to the investors who buy new shares in qualifying firms.
Eligibility:
UK-based companies, with fewer than 250 staff and gross assets of not more than £15 m.
Key benefits: They can have income tax relief at 30% on investments of up to £1m annually as well as capital gains tax exemption on EIS shares.
Example: In Revolut’s early stages, they managed to raise £4 million through the EIS scheme which facilitated their service expansion and customer growth.
4. R&D Tax Credits
The Research and Development (R&D) Tax Credits scheme avails tax relief to firms engaged in the exploitation of new products, processes, or services or the improvement of already existing ones.
Who qualifies? The companies should be based in the UK and bear qualifying R&D expenditure.
Key benefits: a company can deduct 130% from its qualifying R&D expenses or claim 14.5% of the surrenderable loss payable tax credit if it qualifies.
Graphcore, an AI chip firm located in Bristol applied for this credit to support its continuing research and development which has recently led to the production of innovative new products.
5. Innovate UK Grants
To promote the development of new products, processes, or services in businesses, Innovate UK provides several types of grants. Such funds are disbursed through competitive funding competitions.
Who can apply?
Companies must be based in the United Kingdom and design a project that is in line with Innovate UK funding priorities.
Primary Advantages:
These grants can finance 70% of the project costs, thus providing significant support to innovation and expansion.
For instance, Ultrahaptics, a Bristol start-up that builds mid-air haptic technology, has been given £1.5m by Innovate UK to fund research and development activities.
6. Regional Growth Fund
The Regional Growth Fund (RGF) is a body that gives monetary grants and loans in support of private-sector investments and job creation in places in England that rely on the public sector or have been affected by cuts in public spending
Eligibility:
For companies to be eligible, they must be located in appropriate areas of England and have job-creating projects.
Key benefits:
These subsidies can cover 50% of project expenses, thus assisting the development of enterprises that provide additional employment opportunities for communities suffering economic underdevelopment.
Example: Siemens, a global technology company, was given a grant estimated at £1.5 million by RGF to support the expansion of its wind turbine blade factory located in Hull thus creating hundreds of new jobs within this area.
7. Employer National Insurance Contributions Holiday
The NIC Holiday for Employers is a program that allows eligible firms to get a cut in employer’s NIC payments for the first year of employment for certain personnel.
Eligibility:
Companies must be UK-based, have fewer than 50 employees, and employ individuals who meet certain criteria (e.g., young people, ex-offenders, or disabled people).
Key benefits:
It relieves the burden of payment of employers’ national insurance contributions and can help businesses save money and create new jobs.
Example: Perkbox which is the market-leading employee engagement and benefits company has utilized the Employer NIC holiday scheme to support its fast expansion while creating jobs in the UK.
8. Patent Boxes
Under the Patent Box scheme, companies are allowed to pay a lesser corporation tax rate on their profits resulting from patented inventions and other innovations.
Who can apply?
Companies must possess patents granted by either the UK Intellectual Property Office or the European Patent Office through ownership or exclusive rights.
Why choose this option?
Because it can decrease taxes to 10% from sales of patented inventions, which encourages innovation and stimulates R&D investments.
For example, a global pharmaceutical company AstraZeneca has been making use of the Patent Box program to sustain its continuing research activities that have brought about new innovative drugs.
9. Enterprise Zones
Enterprise Zones are specific areas across England that offer incentives such as lower taxes and governmental support to promote business growth and job creation.
Who can apply?
Only firms within the designated Enterprise Zones will be eligible for the program provided they meet other conditions.
Why select this option?
Benefits include; fewer taxes like business rate cuts, enhanced capital allowances among others, streamlined planning process, and access to super-fast internet services.
For instance, Siemens, a technology company with a presence in many parts of the world has started construction on a factory that will produce blades for wind turbines at Humber Enterprise Zone taking advantage of tax breaks and other support available to them while expanding their operations within the UK.
Conclusion
The UK government has shown its commitment to supporting startups by offering a range of programs aimed at assisting these businesses to thrive. These include among other things; cheap finance, tax exemptions, grants as well as loans along with directed help. Therefore, young companies in the country have limitless prospects of obtaining support and taking their rightful place in the global marketplace. They should seize the moments given by those schemes and turn them into thriving ventures that enhance the dynamic innovative UK economy.
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