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It is all too easy for UK tech startups to get bogged-down in the red-tape of running a business. This means that R&D tax credits, for example, are often the last thing on their minds!
Founders are frequently caught up trying to keep on top of books and records to ensure compliance with UK government and HM Revenue & Customs requirements – especially with one eye on a ‘clean’ and hassle-free future exit event.
This compliance distraction often comes at the expense of exploring the myriad of government tax incentives that exist to provide financial and cashflow support to UK startups and fast growing clever companies (potentially a significant expense if missed…!).
Funding stage: SEIS/EIS tax breaks
During the early funding rounds, the Seed Enterprise Investment Scheme (‘SEIS’) and Enterprise Investment Scheme (‘EIS’) can provide a much welcomed boost to equity financing. It seems that the attraction of the SEIS and EIS tax incentives have caught the imagination of many tech startup entrepreneurs and business angels alike and we continue to help increasing numbers of start-up companies access and navigate these tax incentives.
Development stage: R&D tax credit relief
”Yet we continue to be surprised by the number of tech company founders who are unaware of the R&D tax credits incentive and the potential positive impact this tax relief could have on the company’s cashflow (potentially year on year)”
The R&D tax credit incentive can be claimed alongside the SEIS and EIS tax reliefs to help provide a further boost to the cash equity injection. Also, don’t forget that the R&D tax credit relief also aims to complement the UK Patent Box tax incentive.
Tech startups can recover up to 33% of the costs that they have incurred on qualifying R&D projects. And with the high level of innovation across the UK in the tech space, these claims are becoming increasingly commonplace.
So if you are the founder, make sure you don’t miss out on the cashflow funding benefits of the R&D tax credits for tech startups.