Finance, grants and incentives for businesses in the UK

Businesses based in the UK have access to the one of the biggest financial services sectors in Europe. Options range from simple, low cost and accessible business banking services through to specialist corporate funding products or full listing on the London Stock Exchange. In addition businesses can access a wide range of grants, incentives and tax allowances, providing financial support and assistance for R&D, investment in business and networking.

Corporation tax reduced to 20% from April 2015 –lowest in the G8

From April 2013, the rate of UK corporation tax will stand at 23%. This will be reduced to 21% in April 2014 before being cut further to 20% from April 2015. By then, the UK will have the lowest in corporation tax rate in the G8 and joint lowest in the G20.

The UK has the largest network of treaties for the avoidance of double taxation globally and the majority of UK-based companies also benefit from an exemption from corporation tax on any foreign dividends that they receive. The UK also has an extensive range of capital allowances that allow the costs of capital assets to be written off against taxable profits.

Support for Business in the UK

Businesses based in the UK are able to access a wide range of discretionary grants and incentives from the devolved government agencies, local development agencies and local business support organizations.

• UK Regional Growth Funding: a £2.4bn fund operating across England from 2011 to 2015. It supports projects and programmes that lever private sector investment to create economic growth and sustainable employment. Find out more.

• Enterprise Zones: 24 Government-designated Enterprise Zones in England covering over 140 sites which offer incentives designed to support both new and expanding businesses. Find out how your business can benefit from locating your business in an Enterprise Zone.

Grants and incentive are available to companies located in Northern Ireland, Scotland, and Wales.

Enterprise Zones in England

Enterprise Zones in Wales

Enterprise Zones in Scotland

R&D tax credits

R&D tax credits are available for large corporations and SMEs investing in R&D. Specific definitions exist for corporation size and qualifying R&D.

• Large corporations R&D: In addition to the normal 100 per cent deduction, large companies are entitled to a further deduction from their taxable income of 30 per cent of their current spending on qualifying R&D.

• SMEs R&D: In addition to the normal 100 per cent deduction, SMEs are entitled to a further deduction from their taxable income of 125 per cent of their current spending on qualifying R&D (for the purposes of this scheme only, an SME is defined as a company employing up to 500 people).

Further information on support for business research and development and innovation can be found at the GOV.UK website.

Employer’s pay less social security contributions in the UK than in most other European countries.

For 2012/13, the rate for an employer’s “National Insurance Contributions” (NIC) on the earnings of each individual employee (earning over £146 per week) is 13.8 per cent, with no upper limit. For further information on NIC, please see the GOV.UK website.

The UK provides strong support for Intellectual property

The UK is renowned for strongly encouraging business competition, entrepreneurial activity and innovation. A key aspect of this is the protection of new ideas and concepts provided by intellectual property rights (IPR).

The UK is implementing a “Patent Box” to encourage companies to locate the high-value jobs and activity associated with the development, manufacture and exploitation of patents in the UK. It will also enhance the competitiveness of the UK tax system for high-tech companies that obtain profits from patents.

• The Patent Box enables companies to apply a lower rate of Corporation Tax to profits earned after 1 April 2013 from its patented inventions and certain other innovations

• The relief will be phased in from 1 April 2013 and the lower rate of Corporation Tax to be applied will be 10 per cent.

Further information for the ‘Patent Box’ initiative.

The key organisation responsible for overseeing IPR in the UK is the UK Intellectual Property Office which is also responsible for ensuring compliance with International IPR agreements and represents the UK at the World Intellectual Property Organization, the European Union and the World Trade Organisation.

Contact us

Our investment location services are independent, highly professional and free of charge. For specific help setting up in the UK or for help mapping your business ambitions to the UK please contact the UKTI Investment Services Team through our online enquiry form here.