Let us take you by the hand. And lead you towards a cost-saving journey. The origin: London: The destination: Scotland. We’ll show you something that could help change your mind if you’re considering somewhere else to expand your London business.
Thousands of businesses have already chosen Scotland to grow their operations. And there are many financial firms expanding into Scotland, with cost-conscious CFOs seeking where next to grow key areas of their business operations. From back office functions and service centres - to locating a whole financial service division – a diverse range of financial firms are branching out in Scotland every year.
Here's how your London business can grow in Scotland.
North of the border has proven to be quite a catch for London firms wanting to make their next move.
And the figures prove it: Scotland continues to attract the second highest Foreign Direct Investment in the UK – up by 51% last year – after London. Also in 2015, the number of investments into here soared by 119. In Edinburgh in 2015, over 6,000 new businesses were incorporated, up 19% on the previous year.
Coincidence? Not quite. Think lower business operating costs as one of the many factors why London firms spread their wings into Scotland. And this includes the likes of Morgan Stanley, Black Rock and LendingCrowd – or over 600 financial and business firms – which all have bases or head offices here.
1. You could reduce your employee expenditure by around £5000 per head per annum
And this is worth remembering. Co-location and cost reduction go hand-in-hand. According to Change Recruitment Group, the trend of relocating roles to Scotland to save costs is continuing. Businesses such as HSBC and BNP Paribas are actively engaged in this trend.
Outlay for an average professional salary is £5000 less for an employee in Scotland (Payscale.com). This equates to a saving of half a million per year for a division of 100 staff. These are round figures of course – though employee outlay is a major expenditure, especially if your headcount number is in the hundreds.
2. You'll be exposed to significantly lower property costs
And when we say lower we mean much lower. Reading this post from a London office? If so, the space you’re sitting in could cost around £1300 compared with £667 in Scotland. And this is without the desk in front of you. In general figures, property costs are almost half - £44.50 per sq foot versues £87.50 in London.
Cost for a breathtaking view in a Scotland office? Priceless.
Property in key locations in Scotland is in big demand too: According to Dougray Smith, occupier take up in Edinburgh for last year was around 950,000 sq ft, the highest since 2001.
3. Your business can benefit from up to 40% lower operating costs in Scotland
Scotland is an excellent complementary location for London businesses to base specific divisions or departments – but at a lower investment. Business operating costs in Scotland are up to 40% of those based in the London city centre. (Financial Times, FDI Benchmark Report Office).
This means financial services firms in the UK capital benefit from lower operating costs of establishing satellite offices in Scotland. According to the Benchmark report, the annual running costs for a 50-seat office are lowest in Dundee (£4.14 million), closely followed by Inverness (£4.20 million) and Glasgow (£4.63 million).
The costs for a similar operation in London are £7.69 million. Point made.
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4. Benefit from a lower rate of corporation tax of 10% until 2017
Entrepreneurship is the mother of invention in Scotland. Not just necessity. That’s why if you’re a fintech firm you could transform a great patented idea into a successful business. Under the Patent Box scheme, you could benefit from a rock-bottom 10% corporation tax until 2017 on any profits from commercialising your UK or EU patent here in Scotland.
That’s a full 56% lower than normal.
What an excellent incentive for London fintechs like yours to bring existing patents to commercial life continue to develop innovative new ones.
Here are other firms located in both London and Scotland. Could you be the next one?
Clydesdale Bank, Direct Line Insurance, Esure, Aberdeen Asset Management, Alliance Trust, Aegon UK, Baillie Gifford, Kaimes Capital, Kennox Asset Management, Martin Currie, Royal Bank of Scotland, Sainsbury’s Bank, Scottish Widows, Standard Life, Tesco Bank, Virgin Money and Walter Scott.
Have we started to help change your mind?
Scottish Development International is here to help your financial firm consider Scotland as a complementary location to London. We can assist you with:
- Advice on setting up in Scotland
- Grant funding and risk capital
- R&D and innovation programmes
- Partnering and collaboration opportunities
- Investment opportunities and support in Scotland
- Government, industry and academic contacts
We look forward to helping you.