The Seed Enterprise Investment Scheme (SEIS) is boosting small technology business start-ups – especially around London’s magic Silicon Roundabout.
Download the comprehensive guide to the SEIS here
A survey by international accountants UHY Hacker Young has looked at how many new businesses have opened across the UK by postcode area and found the EC1V postcode around Silicon Roundabout has had thousands more companies open for business than anywhere else.
In the 2013-14 tax year, more than 15,600 firms started in the small area that around Moorfields Eye Hospital that takes in The Angel, Islington, City Road and Old Street.
The number of new starts in the area is triple the total in the postcode with the fastest growing rate of new starts – Bermondsey SE1 – which saw a 13% year-on-year boost to 5,850 new businesses.
Silicon Roundabout also outstripped new starts in the financial services zone around Canary Wharf five to one – a total of 3,180 new businesses opened in the year.
Where business is happening
Mayfair also ranked surprisingly high, according to Colin Jones of UHY Hacker Young.
He explained the neighbourhood has the most expensive office space in the world, but still saw 2,000 new businesses move in.
“Silicon Roundabout is the place where everything seems to happen in London,” he told specialist web site SEIS.co.uk.
Many of London’s new businesses are funded by the Seed Enterprise Investment Scheme (SEIS) and crowdfunding.
SEIS has provided at least £100 million for around 2,000 new business start-ups, according to HM Revenue & Customs (HMRC), which manages the investment program.
Announced by Chancellor George Osborne in his Budget 2012, SEIS offers investors taking an equity stake in qualifying companies generous tax breaks, including a 50% income tax reduction, capital gains tax exemptions and loss relief.
Rising rents push firms out
The tax-efficient investment wrapper is designed to provide funds for businesses with no track record that have difficulties raising money elsewhere.
“Landlords are cashing in on entrepreneurs by raising the rents in and around Silicon Roundabout,” Jones told Seis.co.uk
“It’s at the centre of the UK’s technology research and is a vital place for entrepreneurs to build their businesses, but many are now being forced into neighbourhoods providing cheaper business premises, which is why Bermondsey is seeing a rapid rise in new start companies.”
The research revealed only three of the top 20 start-up neighbourhoods were outside London – BN3 (Hove, West Sussex); LS14 (Leeds) and SK9 (Alderley Edge and Wilmslow, Cheshire).
