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 a venture capital scheme within seven years of your 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 tax relief on your shares. The maximum amount you can receive from SEIS is £250,000. 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 is only eligible for applications for investments made on or before 5 April 2023.

It was designed to be used by social enterprises like charities, community interest companies or community benefit societies. If you invested in a social enterprise that used SITR on or before 5 April 2023, you could get tax relief worth up to 30% of qualifying investments on your shares.

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Venture Capital Trust (VCT)

You can also invest shares in a VCT and benefit from several tax relief incentives. A VCT is a company (like an investment trust) that has been approved by HM Revenue & Customs (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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Scotland is an exceptional place for research and development (R&D), and there is a range of generous incentives if your businesses works on innovation projects here.

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 that 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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If your company is in the creative sector, you can take advantage of several UK-wide tax relief schemes for the creative industries.

You could be eligible if you are involved in any of 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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