The 8 best government grants for small businesses & startups in the UK
Recognising the significance of small businesses as engines of economic growth, the UK government has established a robust system of financial support through grants. In 2021/22, the government spent around £172.1 billion in the form of grants. This represents around 16.5% of all government spending for that year. These grants are a testament to the government’s commitment to fostering an environment conducive to entrepreneurship and innovation.
But what exactly is a business grant? Simply put, a business grant is a sum of money awarded by the government or other organisations to support and nurture businesses. Unlike loans, grants do not require repayment, making them an attractive source of funding for entrepreneurs and small business owners.
In this article, we will explore the intricacies of government grants for small businesses in the UK, delving into the various types of grants and tax relief schemes available for your business.
The best government grants to start a business in 2023
The United Kingdom government offers an extensive array of government business startup grants that cater to specific industries, community groups, and business types.
As a startup or small business, you can choose from a range of options, including:
- Innovate UK: Innovate UK funds many grants and competitions to foster business growth and support innovative ideas, including the UKRI Challenge Fund, Smart grants, Knowledge transfer partnerships, the Small Business Research Initiative (SBRI), and more.
- Local Enterprise Partnerships (LEPs): These are local funding opportunities available as part of business-led partnerships between local authorities and local private sectors. There are currently 36 LEPs available across England.
- Scottish Enterprise: For those based in Scotland, Scottish Enterprise has several grants available for a variety of startups and small businesses, including the Smart: Scotland grant, the Regional Selective Assistance Funding scheme, the Scottish Co-Investment Fund and the Scottish Venture Fund.
- Business Wales: Over in Wales, Business Wales’ Finance locator page is a great resource to find hundreds of funds and grants for businesses based in Wales, aimed at a great variety of industries and business structures.
- The National Lottery Heritage Fund: These funds are available for businesses focusing on projects relating to UK heritage, such as landscape design, rural projects, cultural traditions, historic buildings, monuments and environments, museums, libraries and archives, and more.
- Arts Council National Lottery Project Grants: Similarly, the Arts Council offers National Lottery-funded grants of up to £100,000 in the arts, libraries and museum sectors, supporting artists, community and cultural organisations focusing on projects relating to arts festivals, dance, literature, music, theatre and visual arts.
- UnLtd. Awards: For entrepreneurs out there tackling social challenges, UnLtd offers grants of up to £8,000 (for those starting up) and £18,000 (for those who wish to scale up their business).
- Hatch Enterprise: Hatch offers multiple programmes and grants directed at supporting underrepresented entrepreneurs and small businesses, including Launchpad (for those just getting started) and the Southwark Pioneers Fund Accelerator (for those looking to scale their business).
Are you self employed looking for ways to secure a grant? If so, check out our article “How to Secure a Self Employed Grant for Your Business: Tips and Tricks“.
Need help managing your accounting or filing your Self Assessment tax return? Our experts are here to help you.
The best government tax relief schemes for small businesses and startups
In addition to the grants and funds outlined above, there are several tax relief schemes available in the UK that can help your startup or small business reduce costs:
- Research and Development (R&D) tax reliefs: The government’s Research & Development (R&D) initiative provides tax reliefs to companies undertaking projects that promote innovation science and technology. Find out how Sleek can help you secure SEIS tax relief.
- Seed Enterprise Investment Scheme (SEIS): This government initiative is great for small businesses looking to raise investment of up to £250,000. This will allow you to attract investors and business partners and raise equity finance, by providing 50% tax relief for individual investors. Find out how Sleek can help you secure SEIS tax relief.
- Small business rates relief: If your business occupies a property with a rateable value lower than £15,000, you might be eligible for business rates relief. How much relief you get will depend on your property’s rateable value. Those occupying properties with a rateable value of £12,000 or below will not pay business rates on it, while for properties with a rateable value of £12,001 to £15,000, the rate of relief will vary.
- Employment Allowance: This allows employers to reduce their National Insurance liability by up to £5,000 per year. Eligible employers include businesses and charities whose Class 1 National Insurance liabilities were less than £100,000 per tax year. It also includes those who employ a care or support worker. If you would like more information on employment allowance, do click that link to find out more!
- Corporation Tax relief: The current Corporation Tax rate on profits is 25%, but you can apply for tax relief on expenses falling under certain categories. For example, you can deduct certain costs of running your business, such as equipment, machinery and business vehicles. If your business has taxable profits below £50,000, you can apply for Marginal Relief, while there are a few other tax reliefs for those working in the creative industries, producing patents, and more. Still need more information about corporation tax for small businesses? Look no further, click that link to find out more.
Need help managing your accounting or filing your Self Assessment tax return? Our experts are here to help you.
What is the difference between a business grant and a business loan?
A business grant is a publicly funded scheme that awards grants without requiring repayment. Grants are usually awarded by trusts, government entities, and charitable organisations. Unlike loans, grants serve as a form of financial support that does not impose repayment obligations on the recipients.
A business loan is usually given by private lenders, with the expectation of repayment and often an agreed-upon interest rate that compensates the lender for their services. This interest is added to the borrowed amount, forming part of the total repayment obligation. Small businesses are responsible for repaying the loan and interest within the agreed timeframe.
Unlock the potential of government grants for your small business
If you are considering applying for a grant or tax relief scheme, remember to thoroughly assess your eligibility, carefully prepare your application, and submit it before the deadline. When applying for a government grant, be persistent and stay positive.
We understand that navigating the grant application process can be overwhelming, especially when combined with your day-to-day business operations. If you’re unsure about any aspect of your taxes or need assistance with financial tax planning, consulting our tax advisors for corporate tax advice will save you time, money, and potential headaches. To provide you with an efficient and seamless tax process, Sleek has the right set of solutions for you!
Need help managing your accounting or filing your Self Assessment tax return? Our experts are here to help you.
FAQs
Yes, if your grant application is rejected, you can usually reapply. However, it’s essential to evaluate the reasons for the rejection and make improvements to your application before resubmitting.
No, a business grant is different from a business loan. Grants are non-repayable funds provided by the government or other organisations to support small businesses, while loans need to be repaid with interest.
Late payment of taxes on grants can result in penalties and interest charges imposed by HM Revenue & Customs (HMRC). It is crucial to pay your tax liabilities on time to avoid unnecessary expenses and ensure compliance with tax regulations.
