Yes, it will help you greatly if you use a .uk domain if your target market is the UK. In addition you should try and find a host where the server is located in the UK.
You can even take it a step further. I run a small local IT Services company. I offer on-site IT support and computer repairs and upgrades but I am not able to service customers more than around 30 miles away.
For this reason I bought Surrey PC Support | Low Cost PC Support Services to enable me to rank highly for keyword searches featuring the word 'Surrey'. I have also targeted the towns in my area.
This does result in lower visitor numbers but higher conversions which suits my business at the stage it is at now. It also helps me target local searches in Adwords which keeps the cost down nicely. The last think I need is to be paying for clicks from people in Leeds or wherever.



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