Budget Measures May Help Startups

Posted on 9th April 2013

The Chancellor George Osborne’s recent Budget is set to help start-ups and early stage firms grow, although most measures will not start until next April, which could mean that many start-ups do not see much difference for the next twelve months.

The £2,000 of National Insurance Tax relief for small businesses will certainly help early stage firms to take on staff or maybe even employ their first person and help them to grow.

The measure means that every business will be able to employ one worker on a salary of £22,400, or four employees working full-time on the adult National Minimum Wage, without paying any employer National Insurance Contributions (NICs).

While another move to help startups comes in the form of tax relief for investors. Capital Gains Tax will be extended for investors in startups, which means that they will receive relief on capital gains arising in 2013 to 2014 as long as they are reinvested in that year or the following year through the Seed Enterprise Investment Scheme (SEIS).

To be eligible for SEIS, firms must be no more than 24 months old, have less than £200,000 in assets and fewer than 25 employees. Unlike the Enterprise Investment Scheme (EIS), the capital gains tax relief in a SEIS is a re-investment “relief” rather than a “deferral” of the eventual payment of the tax.

In addition, the Small Business Research Initiative (SBRI), designed to support companies to develop new technologies has received a boost in the form of extra funding.

Currently businesses compete for £40m government contracts to develop technologies that support the public sector. However, it was announced last month that these contracts will be increased to £100m in 2013-14 and £200m in 2014-15.

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