Boost for small businesses as UK government launches R&D planStaff writer ▼ | October 29, 2015
In a major boost for pioneering small businesses, the Financial Secretary to the Treasury David Gauke launched a new plan outlining how government will make it easier for small businesses investing in research and development to claim tax relief.
New plan Making it easier for small businesses
The tax relief, which encourages companies to invest in costly new product development, helps companies reduce the amount of corporation tax they pay on profits by offsetting them against any investment in research and development.
Latest statistics for 2013 to 2014 show more than 15,000 SMEs claimed the relief in 2013, an increase of around 19 per cent from the previous year, but the government wants to go further.
From November, small companies – with a turnover under £2 million and fewer than 50 employees – will be able to seek advance assurance on R&D tax relief. This will give them greater certainty and enable them to plan their finances effectively.
HMRC will explore ways to improve its communication around R&D tax relief, including looking at ways to use data and work with other government agencies to identify companies that have carried out R&D but have not claimed relief.
Interactive guidance will be developed with stakeholder involvement.
HMRC evaluation shows that each £1 of tax foregone by R&D tax relief stimulates between £1.53 and £2.35 of additional R&D investment.
SME R&D relief works by way of super deduction, allowing companies to reduce profits liable to corporation tax by 230 per cent of their qualifying R&D expenditure.
In 2013/14, businesses received £1.75 billion in R&D tax relief, an increase of almost £750 million since 2009/10. ■