For tech companies, there are a number of advantages your tech business could benefit from if you choose to bring your business to the UK.
While any business operating in the UK will have access to benefits, there has been an increased focus on encouraging digital companies to bring their headquarters to Britain, which means there are even more reasons for you to look into the advantages.
If you’re thinking about migrating to the UK with your tech business, these are the benefits you could have access to.
The patent box is a corporation tax relief where those using patents are able to receive a reduced corporation tax rate.
Any profit earned through the patent can be taxed at the lower rate of 10%, compared to the usual rate of 19%. The aim of the reduced rate relief is to encourage tech companies to apply for patents in the UK.
It’s important to note that a couple of restrictions apply to this relief. For example, the relief may only be claimed when the patent has been received – not when you’ve applied for it. Restrictions: – tax breaks give only when patent received. Your company must also be registered in both the UK and the EU for the relief to apply.
Research and development
A big benefit for tech companies in the UK is the relief that comes with research and development (R&D). If you’re looking to developing ground-breaking technology, you’ll benefit from the tax advantages that come from investing in research into your products.
Number of various benefits for all tech companies of all sizes
There are two varieties of R&D benefits depending on the size of your company. The first relief is designed for SMEs and offers a 125% deduction of the amount they wish to invest in R&D. On top of this, those progressing technology have the chance to earn 2800 euros for every 10,000 euros spent on R&D.
Even if you’re a small business not paying corporation tax, you are still able to claim 24.5% of R&D funds.
For larger business, refunds on payroll taxes are available. Larger businesses are also able to gain access to a grant where 10% or less of the money spent on R&D can be claimed back.
The Innovation Hub is perfect for tech start ups in need of legal advice on regulations.
Only some tech companies will qualify this, as there are certain criteria to be met. For example, you must be able to prove that the business will have a positive impact. The second condition is that the company is breaking some ground and heading in a direction that no one else is.
If you qualify, you’ll be fast tracked through and will be able to get help on working through regulations not just for the UK, but for the whole of Europe.
Intellectual property tax relief
This tax relief encourages tech companies of all sizes to get creative. In a bid to increase the use of intellectual property, the government has established tax deductions for certain businesses with headquarters in the UK.
For example, if you’re applying for patents you can deduct the expense from overall tax liability.
EU tax benefits
As a business owner in the UK, you’ll also receive tax benefits from the EU. If you’re doing business with other UK businesses, you will be able to avoid VAT and custom duties. It’s worth noting that EU tax benefits will without doubt change once Brexit comes into effect, so make sure you keep an eye on the news.
National Insurance Contributions (NICs) in the UK are usually lower than those in other countries. NICs holidays can also be used in order to gain more funds for start-up growth.
Tax treaties in the UK work by helping smaller companies avoid double taxation. This is also perfect for businesses looking to trade on an international level.
Tax breaks for London-based tech companies
If you’re a tech company based in London, you’ll have access to certain tax breaks. These aim to boost start ups into giving investors an incentive to fund them.
For each 150,000 euros raised through investments, 7,000 euros can be received in tax breaks.