‘Too Many’ Small Business Innovators Unaware of R&D Tax Credits
£14bn worth of research and development tax credits have been claimed since 2000, but only an extra 2,625 enterprises applied last year
‘Too many’ UK small businesses are unaware of possible R&D tax credits they’re entitled to claim, according to a new report from HMRC.
The figures reveal that 18,630 small firms claimed the grant in 2014/2015 – an increase of just 16% or 2,625 companies on the previous financial year – suggesting many are slow to capitalise on the initiative.
The finance and insurance and construction and real estate sectors appear most in the dark about the possible benefits, with their claims accounting for just 1% and 2.1% of the total respectively.
Designed to encourage greater innovation spending by UK enterprises, R&D tax credits can be claimed as tax relief or a cash payment.
Since their introduction in 2000, £14bn worth of R&D tax credits have been claimed by UK businesses.
To qualify, businesses must employ fewer than 500 people, and have either an annual turnover of no more than €100m or a balance sheet total not exceeding €86m.
Matt Watts, director in tax services to businesses at Smith & Williamson, said:
“Companies in the early years of trading are often under pressure from a cashflow perspective. If the company is spending money innovating and advancing technology, a claim for R&D tax relief resulting in a cash repayment can be extremely valuable.”