From April 2024, UK businesses can access enhanced R&D tax relief through the merged RDEC and new ERIS schemes. With generous deductions and credits for R&D-intensive projects, the schemes offer tailored support to fuel innovation and drive growth.

Research and Development (R&D) tax reliefs are designed to support UK companies engaged in innovative science and technology projects. As of April 2024, the R&D Expenditure Credit (RDEC) and the Small and Medium Enterprise (SME) Scheme were merged. The new R&D expenditure credit (RDEC) and enhanced R&D intensive support (ERIS) came into effect for accounting periods beginning on or after 1 April 2024. While the expenditure rules for both are the same, the calculation methods differ.

The merged RDEC scheme is a taxable expenditure credit available to eligible trading companies subject to UK Corporation Tax. Even if a company qualifies for the ERIS, it may choose to claim under the merged scheme instead, but both schemes cannot be claimed for the same expenditure.

Although the calculation and payment processes for the merged RDEC scheme are similar to the previous RDEC scheme, there are some key differences:

• Small profit-making and loss-making companies benefit from a lower rate of notional tax restriction.
• A more generous PAYE cap applies.

The merged RDEC scheme is subject to Corporation Tax, as it is considered trading income.

The ERIS scheme provides additional support for loss-making, R&D-intensive SMEs:

• They can deduct an extra 86% of their qualifying costs (in addition to the 100% deduction already included in their accounts), resulting in a total of 186% of qualifying costs being deductible when calculating their adjusted trading loss.
• They can also claim a payable tax credit, which is not taxable and can be worth up to 14.5% of the losses available for surrender.

There have also been significant changes regarding the availability of relief for overseas R&D activities, which are now more restricted.

Small businesses across the UK can now access streamlined support and advice through the newly launched Business Growth Service, designed to simplify and enhance the way SMEs engage with government resources.

Simplifying Support for SMEs

Navigating government support has often been a challenge for small and medium-sized enterprises (SMEs). In 2023, only 26% of UK SME employers sought external advice, reflecting the complexity of available resources. The Business Growth Service aims to address this by consolidating support into a single, user-friendly platform.

Launching in 2025, the service will offer:

• Revamped Web Interface: A modern, intuitive website for easy navigation.
• Collaborative Development: Built in partnership with businesses and local governments.
• Localised Delivery: Tailored support to meet regional business needs.

Inspired by successful international business models, this service is part of the government’s broader strategy to boost SMEs' growth, productivity, and economic impact.

Reducing Administrative Burdens

Small business owners spend over 33 hours each month on admin tasks. The new service seeks to cut through bureaucracy, freeing up time for entrepreneurs to focus on growth and innovation.

Government Commitment to SMEs

The Business and Trade Secretary reaffirmed the government's dedication to SMEs stating that:

"This government’s Plan for Change will deliver economic growth, and for that to succeed we need SMEs right across the country to be exporting, hiring, and expanding."

Additional Measures Supporting Small Businesses

The Business Growth Service complements other initiatives, including:

• Financial Support: Programmes like Start Up Loans and Enterprise Finance Guarantee continue to offer capital access.
• Late Payment Crackdown: Strengthened measures ensure prompt payments to small businesses, improving cash flow.
• Regulatory Simplification: Reducing red tape to create a more business-friendly environment.

Looking Ahead

The Business Growth Service is a step-change in SME support, promising a centralized, accessible resource hub to help businesses navigate challenges and seize opportunities.

As the launch approaches, SMEs are encouraged to engage with the service’s development to ensure it meets their needs and supports their ambitions.

Starting your own business is exciting but can be overwhelming if you’re not prepared. To help you navigate the journey, we’ve compiled a list of 10 key considerations that will set you up for success. Whether you’re launching a small business or a full-fledged enterprise, these steps will guide you toward building a solid foundation for your business dreams.

1. Define Your Business Idea

Before diving in, ensure your idea is viable. Ask yourself: What problem does my business solve? Who are my customers? Conduct market research to refine your offering and identify your unique selling point (USP).

2. Create a Business Plan

A solid business plan outlines your goals, target audience, financial projections, and operational strategies. This document not only serves as a roadmap but is also essential if you need to secure funding or investors.

3. Choose the Right Business Structure

Your legal structure—sole trader, partnership, or limited company—affects your tax obligations, personal liability, and regulatory requirements. Research which option aligns best with your vision.

4. Register Your Business

Ensure your business name is unique and not already registered. In the UK, you’ll need to register with HMRC or Companies House, depending on your chosen structure.

5. Understand Your Tax Obligations

Get familiar with taxes like Income Tax, Corporation Tax, and VAT. Keep accurate records and consider using accounting software or hiring an accountant to stay on top of deadlines and compliance.

6. Set a Realistic Budget

Financial planning is critical. Calculate your start-up costs, ongoing expenses, and expected revenue. Create a budget to ensure you’re financially prepared for the first 12 months of operation.

7. Open a Business Bank Account

Separate your personal and business finances. A dedicated business account simplifies accounting, helps with tax filing, and presents a more professional image to clients.

8. Build an Online Presence

In today’s digital age, having a strong online presence is non-negotiable. Create a professional website and set up social media profiles to showcase your products or services and engage with your audience.

9. Protect Your Business

Consider business insurance to protect against unexpected losses. Types include public liability, professional indemnity, and employer’s liability insurance if you plan to hire staff.

10. Comply with Legal and Regulatory Requirements

Depending on your industry, you may need specific licenses or permits. Also, ensure you adhere to health and safety regulations, data protection laws, and employment laws.

Conclusion: Set Yourself Up for Success

Starting a business can feel like a monumental task but breaking it down into these 10 key steps makes the process manageable. With careful planning and attention to detail, you can turn your entrepreneurial vision into a thriving reality.

Ready to take the first step? Give us a call, we can share the knowledge we have gained in supporting numerous businesses through the set-up process.

One of the most commonly used and valuable exemptions from Capital Gains Tax (CGT) is for the sale of a family home. Generally, there is no CGT on a property that has been used as your main family residence. However, an investment property that has never been used as your main home will not qualify. This relief is known as Private Residence Relief (PRR).

The rules change if you live abroad. Since April 2015, non-UK residents are subject to CGT on the sale of UK residential property. Only the portion of the gain made after 5 April 2015 is liable for tax. In certain situations, PRR may still apply if the property was the owner’s only or main residence.

If a UK non-resident sells UK residential property, they must submit a non-resident CGT (NRCGT) return and pay any CGT within 60 days of the sale. This return is required even if no CGT is due, or if there is a loss on the sale, and regardless of whether the taxpayer will report the sale on their self-assessment tax return.

There are penalties for not filing the NRCGT return on time or for failing to pay any tax owed by the deadline.

The letters in your tax code indicate whether you are entitled to the annual tax-free personal allowance. These codes are updated each year and help employers calculate how much tax should be deducted from your salary.

For the current and upcoming tax year, the basic personal allowance is £12,570. The tax code corresponding to this amount is 1257L, which is the most common tax code used for those with a single job, no untaxed income, and no unpaid tax or taxable benefits (such as a company car).

Your tax code might include various other letters and numbers. For instance, letters like "M" indicate that an employee is claiming the marriage allowance, or "S" shows that Scottish income tax rates apply. If your tax code numbers change, it often means your personal allowance has been reduced.

There are also emergency tax codes (W1 or M1), which are used when a new employee does not have a P45. These codes calculate tax based on the current pay period.

If your tax code starts with a 'K', this means deductions for company benefits, state pension, or previous tax owed, exceed your personal allowance. However, the tax deduction for any pay period cannot exceed half of your pre-tax salary or pension.

It is essential to verify your tax code to ensure the correct information is being applied. If you have any questions, we are here to help.