Tax Incentives

As a business owner or investor in Scotland, there are several tax relief schemes and incentives available to you.

If you’re an investor, these tax relief schemes and incentives can help reduce the amount of income tax you pay from your shares. And if you’re a business they can help you attract investors or reduce the tax you pay on certain profits.

Tax relief and incentives for investors

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.

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Seed Enterprise Investment Scheme (SEIS)

If you’re investing in a seed enterprise that’s less than 2 years old, the Seed Enterprise Investment Scheme (SEIS) can help you get a tax relief on your shares.

On the other hand, if you’re thinking of starting 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 a tax relief 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 a number of tax relief incentives. A VCT is a company (like an investment trust) that’s been approved by HMRC 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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Tax relief and incentives for Research and Development (R&D)

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

The Patent Box

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 a number of 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 tax advantage of this relief scheme. Under the scheme, you can deduct qualifying costs from your yearly profit, and also claim a 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 who 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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Tax relief for creative industries

Companies in the creative sector can take advantage of a number of UK-wide tax relief schemes for the creative industries. If you’re involved in 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, you could be eligible. These schemes offer tax deductions on certain types of expenditure.

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In this section

Investment for jobs

You may be able to get funding if your project creates or safeguards jobs in Scotland.

Research and development funding

If you invest in Scotland, your business can benefit from research and development funding for innovation projects.

Attracting investment

Fund your business through venture capital, loans and equity funding.

If you have any questions or want to talk with one of our advisers, we’re always ready to help.