Accountants for Funded Startups UK

Investor-ready accounts and tax compliance for funded UK startups.

Once investment lands, the compliance obligations change. An EMI option pool needs structuring before you hire, an R&D claim is now material enough to manage actively, the <a href="https://www.gov.uk/guidance/submit-your-employment-related-securities-ers-return">6 July ERS return deadline</a> applies from the moment the scheme is in place, and your accounts need to meet the expectations of your board and future investors. A generalist accountant who encounters these situations occasionally is a different thing to a specialist who handles them every month.

What makes funded startups tax different.

The EMI option pool needs setting up before the first hire

An EMI scheme that is not correctly structured, or where grants are not notified to HMRC by the 6 July deadline, can cause options to lose their qualifying status. The <a href="https://www.gov.uk/guidance/submit-your-employment-related-securities-ers-return">6 July annual ERS return deadline</a> applies to every company with options in place, whether or not any grants were made in the year. Late notification is not recoverable.

R&D claims are now large enough to warrant active management

Once a funded startup has an engineering team, R&D relief claims are typically material. The <a href="https://www.gov.uk/guidance/corporation-tax-research-and-development-tax-relief-for-large-companies">merged scheme</a> replaced the old SME and RDEC routes from April 2024. Claims require a technical narrative, a financial analysis of qualifying costs, and an <a href="https://www.gov.uk/guidance/submit-detailed-information-before-you-claim-research-and-development-rd-tax-relief">Additional Information Form</a> submitted before the CT600. First-time claimants must also notify HMRC within <a href="https://www.gov.uk/guidance/tell-hmrc-that-youre-planning-to-claim-research-and-development-rd-tax-relief">6 months of the period end</a>.

The section 431 clock runs on new hires receiving restricted shares or options

Every time a new employee receives restricted securities, a <a href="https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm30450">section 431 joint election</a> must be made within 14 days of acquisition. Missing it is a common funded-startup trap, particularly when headcount is scaling quickly. Payroll scaling also raises <a href="https://www.gov.uk/national-insurance-rates-letters">employer NIC</a> at 15% above the £5,000 secondary threshold, with the Employment Allowance available once there is more than one employee paid above the threshold.

Investor-ready accounts are a different product to standard accounts

Accounts that satisfy statutory requirements are not the same as accounts that investors and future lead investors can rely on quickly. The level of detail in the notes, the quality of the management accounts between annual filings, and the reporting cadence your board expects all affect how your next round is perceived. Standard compliance filings are not designed for this purpose.

How we help funded startups.

EMI scheme setup and annual ERS returns

We structure the EMI option pool, coordinate the <a href="https://www.gov.uk/tax-employee-share-schemes/enterprise-management-incentives-emis">HMRC valuation process</a>, prepare grant documentation, notify HMRC of grants by 6 July following the tax year of grant, and file the <a href="https://www.gov.uk/guidance/submit-your-employment-related-securities-ers-return">annual ERS return by 6 July</a> each year. We flag any disqualifying events and advise on the BADR interaction at exit for EMI holders.

R&D merged scheme claims with AIF submission

We prepare the technical narrative, identify qualifying staff costs and subcontractor spend, calculate the <a href="https://www.gov.uk/guidance/corporation-tax-research-and-development-tax-relief-for-large-companies">above-the-line credit</a>, and submit the <a href="https://www.gov.uk/guidance/submit-detailed-information-before-you-claim-research-and-development-rd-tax-relief">Additional Information Form</a> before the CT600. For loss-making companies spending at least 30% of total expenditure on R&D, we assess whether the <a href="https://www.gov.uk/guidance/corporation-tax-research-and-development-tax-relief-for-small-and-medium-sized-enterprises">ERIS route</a> applies. We do not overclaim.

Investor reporting, management accounts and Corporation Tax

We produce board-ready management accounts, advise on the burn and runway reporting your investors expect, and handle Corporation Tax planning as profits arrive. The <a href="https://www.gov.uk/corporation-tax-rates">19% small profits rate applies to profits up to £50,000 and the 25% main rate above £250,000</a>, with marginal relief between. Where a funded startup has subsidiaries or associated companies, those thresholds divide accordingly.

Common questions

We just raised. What should we set up first?

The most time-critical items are the EMI option pool (set up before the first option grant, with HMRC valuation agreed before or at grant), the <a href="https://www.gov.uk/guidance/tell-hmrc-that-youre-planning-to-claim-research-and-development-rd-tax-relief">R&D claim notification</a> if this is your first period with qualifying spend, and section 431 elections for any restricted securities already issued. The <a href="https://www.gov.uk/guidance/submit-your-employment-related-securities-ers-return">6 July ERS return</a> deadline applies from the first year the scheme is in place.

How big should our EMI option pool be and how do we grant options?

EMI allows up to <a href="https://www.gov.uk/tax-employee-share-schemes/enterprise-management-incentives-emis">£250,000 of unexercised option value per employee (over a rolling three-year window) and £3m across the company</a>. The company must have gross assets of no more than £30m and fewer than 250 FTE. Pool size depends on your dilution model and hiring plan. We structure the pool, agree the valuation with HMRC, and prepare the grant documentation.

Can we claim R&D while still loss-making?

Yes. The <a href="https://www.gov.uk/guidance/corporation-tax-research-and-development-tax-relief-for-large-companies">merged scheme's 20% credit</a> is above the line and taxable, so a loss-making company receives it as a reduction in its tax liability or, subject to the rules, a payable credit. If your company is loss-making and your R&D spend is at least 30% of total expenditure, the <a href="https://www.gov.uk/guidance/corporation-tax-research-and-development-tax-relief-for-small-and-medium-sized-enterprises">ERIS route</a> may give a more valuable outcome. Speak to us about your specific position.

What is the ERS return deadline?

<a href="https://www.gov.uk/guidance/submit-your-employment-related-securities-ers-return">Annual ERS returns must be filed online by 6 July</a> following the end of the tax year. This applies to every company with share schemes or options in place, including EMI schemes, and includes nil returns where no events occurred in the year. The same 6 July date now also applies to EMI grant notifications.

Do the Corporation Tax thresholds change if we have subsidiaries?

Yes. The <a href="https://www.gov.uk/corporation-tax-rates">£50,000 and £250,000 profit thresholds</a> that determine whether the 19% small profits rate, marginal relief or the 25% main rate applies are divided by the number of associated companies, including subsidiaries. A funded startup with two subsidiaries would have effective thresholds of £16,667 and £83,333. Speak to us about your group structure.