Charted Accountancy Services that specialise in small business, sole traders and start ups

VSP Accountancy Services Limited

Not quite as attractive as SEIS, but still a generous tax relief to encourage individuals to invest in smaller, higher-risk trading companies.

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Seed Enterprise Investment Scheme (SEIS)

Enterprise Investment Scheme (EIS)

The SEIS is designed to encourage individuals to invest in smaller, higher-risk trading companies by offering a range of tax reliefs to individuals who subscribe for new shares in those companies. The tax incentives are one of the most attractive available in the UK and includes income tax and capital gains tax reliefs.

We all hope our investments do well, but if you pay tax at 45% and make an investment of £5,000 that fails completely, you only lose £1,375 due to the tax relief reducing your risk dramatically!

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Enterprise Management Incentives (EMI)

Research & development (R&D) Tax Relief

Business Structures

The two key criteria in determining which companies are eligible for R&D tax credits are 'innovation' and 'uncertainty'. A company commencing a project which it is uncertain the objective can be achieved and that is innovative it nature is likely to qualify for R&D tax relief.

This enhanced tax relief was introduced by the Government to encourage R&D projects from companies operating within the UK. Approximately £1.5bn per year has been set aside for companies deemed to be undertaking qualifying R&D activities. 

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EMI options can be granted to any employee or director who satisfies the certain conditions. One of the big advantages of EMI schemes is their discretionary nature - options do not need to be offered to all employees nor on equal terms. The other major advantage is that EMI options are extremely tax efficient not only for employees but also for their employers who can claim corporation tax relief. Employees are taxed, at the date of exercise, on the value of the shares when the options were granted less the exercise price. The increase in value is free from income tax. When the shares are subsequently sold the effective rate of capital gains tax for employees will be 10% providing the EMI option has been held for one year.

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One of the first big decisions you will need to make on commencing a business is how you structure it. This decision has a major impact on the way you will be protected by law and the way you are affected by HMRC rules and regulations.

Click here to read more about the four main types of business structure and the advantages and disadvantages of each.