If you’re investing in certain companies, social enterprises, or venture capital trusts in Scotland, you may be eligible for tax relief from several schemes. If you’re thinking of running a business here, these schemes can make your company more attractive to investors.

Enterprise Investment Scheme (EIS)

If you’re investing in an established Scottish company, the Enterprise Investment Scheme can help you get tax relief on your shares.

If you’re thinking of locating your business in Scotland, you can take advantage of the EIS to attract new investors. You can raise up to £5 million each year using EIS, and a maximum of £12 million in the company’s lifetime. There are some rules around what you can use the funds for and when you need to use it; for example, you must receive an investment from venture capital scheme within 7 years of first commercial sale.

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Seed Enterprise Investment Scheme (SEIS)

If you’re investing in a seed enterprise that’s less than two years old, the Seed Enterprise Investment Scheme (SEIS) can help you get a tax relief on your shares. The maximum amount you can receive from SEIS is £150,000 and this includes any minimum financial assistance (previously de minimis).

On the other hand, if you’re thinking of establishing a seed enterprise or start-up in Scotland, you can use the SEIS to help you attract investors and get trading.

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Social Investment Tax Relief (SITR)

The Social Investment Tax Relief (SITR) scheme can be used by social enterprises like a charity, community interest company or community benefit society. If you invest in a social enterprise that uses SITR, you’ll get tax relief worth up to 30% of qualifying investments on your shares.

If you’re thinking of moving your social enterprise to Scotland, rather than investing in one, you can use the SITR scheme to help you attract new investors.

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Venture Capital Trust (VCT)

You can also invest shares in a VCT and enjoy several tax relief incentives. A VCT is a company (like an investment trust) that has been approved by HMRC (HM Revenue & Customs) and invests in, or lends money to, unlisted companies.

This tax relief scheme helps you reduce the amount of income tax you pay on subscription and dividends, as well as capital gains tax.

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Scotland is a magical place for R&D and it offers generous incentives for businesses working on innovation projects.

The Patent Box lower tax scheme for patents

Under the Patent Box tax relief scheme, companies can claim a lower tax rate for profits that come from patented inventions. You’ll pay 10% corporation tax rather than the usual 19%. You can benefit from this incentive if your company owns or exclusively licenses-in patents granted by the UK Intellectual Property Office or the European Patent Office, as well as several countries in the European Economic Area.

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Small and medium sized enterprises (SME) R&D Relief

If you’ve got an SME based in Scotland, you can take advantage of this relief scheme. Under the scheme, you can deduct qualifying costs from your yearly profit, and claim tax credit if you’re making a loss.

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Research and Development Expenditure Credit

This tax incentive is mostly used by large companies, but it can also be used by SMEs which are being contracted to work on R&D projects by a large company. The credit is calculated as a percentage of your company’s qualifying R&D expenditure and is subject to corporation tax. Qualifying expenditure can include things like staff costs, materials, and subcontractor costs.

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Companies in the creative sector can take advantage of several UK-wide tax relief schemes for the creative industries.

You could be eligible if you are involved in any for the following: the development or production of British films, high-end TV programmes, children’s TV programmes, animation programmes, video games, theatre productions, orchestral concerts or museum and art gallery exhibitions. These schemes offer tax deductions on certain types of expenditure.

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