Is the UK leading Europe’s Fintech Market?
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Is the UK leading Europe’s Fintech Market?
To summarize, yes! The UK is well known to be one of the leading fintech hubs of the world.
In a 2022 Deloitte article on The UK FinTech Landscape, it is stated that there are over 2500 fintech companies throughout the UK (not to mention that London is the second highest fintech location globally). It is no surprise that firms within the tech sector are looking to open subsidiaries in the UK as the Britain is booming.
Especially for firms in the tech industry, the UK is a business friendly destination.
How so?
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The UK boasts great talent pools, a large tech literate consumer market, favorable regulatory frameworks, and tax incentives such as the seed enterprise investment scheme*1 (SEIS) and the enterprise investment scheme*2 (EIS) that are investor friendly.
*1 How SEIS tax relief helps reduce any losses and magnify any gains
When you invest £100,000 in an SEIS, because of the income tax relief of up to 50%, the effective net cost could be as little as £50,000. 50% CGT reinvestment relief could provide an additional boost of £14,000 or £10,000 (depending on whether 28% or 20% CGT applies).
Loss relief allows you to write off any losses against income tax. So, if your investment falls to zero, you could in effect deduct the £50,000 loss from your taxable income. This gives a potential tax saving of £22,500. Add to that up to £14,000 capital gains reinvestment relief and the maximum effective loss could be as little as £13,500. Meanwhile, if your investment grew by 50%, thanks to the tax relief, you could be looking at an effective gain of 114%.
*2 How EIS tax relief helps reduce any losses and magnify any gains
When you invest £100,000 in an EIS, because of the income tax relief of up to 30%, the effective net cost could be as little as £70,000.
Loss relief allows you to write off any losses against income tax. So, if your investment falls to zero you could in effect deduct the £70,000 loss from your taxable income. This gives a potential tax saving of £31,500 and means the maximum effective loss could be as little as £38,500 (effective cost of £70,000 less loss relief of £31,500). Meanwhile, if your investment grew by 50%, thanks to the tax relief, you could be looking at an effective gain of 80%.