Ready to secure funding? What you need to know when expanding to the UK
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Welcome back to our new series of short, sharp articles – all focused on going international!
This time we are looking at funding when expanding to the UK, what is possible for you at each stage of the journey, and how we can help you get it! Don’t forget we have a full guide available for free to answer more on the key aspects of what you’ll need to know to expand internationally.
Startup funding is a journey, and different sources are suitable at different stages. For now we’re focusing on government incentives that you could (and should!) make the most of. Let’s get into it!
1. Export Market Development Grant
The EMDG is an Australian Government program that aims to help SMEs and startups grow their exports overseas, by contributing to their marketing/promotional costs. It’s administered by Austrade. Like many grants programs, it is complex with three main tiers, and the funding comes from a fixed pool depending on the number of eligible applicants each year, so the amounts received can vary based on that.
Common costs claimed under the EMDG include:
- Overseas representation
- Marketing consultants
- Marketing visits
- Free samples
- Trade fairs, seminars, in-store promotions
- Promotional literature and advertising
- Overseas buyers
- Registration and/or insurance of eligible IP
- Website building costs (for an overseas site)
The process involves submitting your EMDG application to Austrade (if you meet the criteria), and if successful Austrade will make you a grant offer. If you then accept the grant offer, you must match the grant amount yourself. You’ll provide milestone reports along the way in order to claim your funds. Glazed over? We can help you figure this out!
2. UK R&D tax relief
The UK R&D tax relief scheme is similar to the R&D tax incentive in Australia, designed to encourage UK businesses to invest in innovation.
To qualify for R&D relief, your work needs to be part of a specific project to advance science or technology. It can’t be within a social science or a theoretical field, and needs to relate to your company’s trade – either an existing one or one you intend to kick start based on the results of your R&D.
To get R&D relief you need to explain how a project:
- Looked for an advance in science and technology
- Had to overcome uncertainty
- Tried to overcome this uncertainty
- Could not be easily worked out by a professional in the field
All claims need to be made within 2 years of the end of the accounting period. This works by cashing out any loss you have when you need the cash, rather than holding it over against future profits. If you’re in the position of making a profit, it reduces the tax you would otherwise pay, but you’d receive a smaller (net) benefit. Luckily we have an expert R&D tax specialist so don’t lose sleep over this, get in touch!
Ask yourself: Am I doing something technically difficult in a way that I’m experimenting and learning along the way, and which has technical risk? If yes – then it’s worth looking into!
3. Startup concessions
Seed Enterprise Investment Scheme (SEIS)
SEIS is especially for early-stage startups, offering tax incentives for investors in eligible companies. If you’re reading this from Australia, this is similar to the Early Stage Innovation Company (ESIC) concession. There are no specific filing or payment deadlines for companies; investors need to claim the tax relief on their self-assessment tax return. The tax breaks for SEIS include a 50% income tax reduction on investments up to £200,000, and capital gains tax exemption on any profits made from selling shares in the company.
Eligibility criteria:
- Your startup must be a company with fewer than 25 employees
- Your company must be less than 3 years old
- It must have less than £350,000 in gross assets
- It must not have raised funds through another state aid scheme
Enterprise Investment Scheme (EIS)
This scheme is similar to the SEIS but for more established companies. Like the SEIS, it offers tax relief to individual investors, who can claim it on their self-assessment tax return.
Tax breaks can be up to a 30% income tax reduction on investments up to £1 million (up to £2 million if some of that investment is in a knowledge intensive company) and capital gains tax exemption on any profits made from selling shares in the company.
Eligibility criteria:
- Your business must be a company with fewer than 250 employees
- Your company must be less than 7 years old
- It must have less than £15 million in gross assets
- It must not have raised more than £12 million in total through EIS or other state aid schemes
There are other requirements for both of these, so it’s best to check your eligibility with us!
What’s next?
If you’re looking at securing funding for that exciting UK expansion, our team at Standard Ledger is here to support you every step of the way. Contact us today to learn more about how we can help you navigate the complexities of securing international funding, and set your company up for success. Remember, we have experience doing this ourselves, so can give you honest and real information to help you on your journey.
Events coming up
Expanding Your Scaleup to the UK: Legal and Accounting Considerations
More articles
- Starting Out, Early Stage
- Scaling Up, Expanding/Exiting
- Scaling Up, Expanding/Exiting
