R&D tax credits form an important saving for growing small businesses
Chancellor George Osborne announced new measures in the Autumn Statement that will enable small companies to seek “advance assurance” on tax relief for research and development (R&D) projects.
The new measures assure small firms, those with anannual turnover of less than 2m and fewer than 50 employees, that the government will allow all tax relief claims related to R&D tax credits for three years. The tax relief is intended to reduce the amount of corporation tax payed by small companies by offsetting profits against any investments eachmake in important and often costly research and development.
Latest government statistics indicate that more than 15, 000 SMEs claimed the tax relief in 2013: a 19 per cent increase on the previous year. Commenting on the statistics, published in the HMRC report “Making R&D Easier: A plan for small business R&D tax relief”, financial secretary to the treasury David Gauke said: We need to go further to support pioneering small businesses.
research and development is crucial for the long-term growth of the UK economy. That’s why this government wants to increase awareness and make it easier to apply, he added.
HMRC predicts that for each 1 of tax foregone by the research and development tax relief, between 1.53 and 2.35 of additional investment will be made by SMEs.
The report outlined Treasury plans to improve communication around the tax relief. As well as the development of an interactive online guide, proposals include looking at ways of collecting data and working with other government agencies to identify companies that have carried out R&D but haven’t claimed relief.
Other R&D tax credits news in Osborne’s Autumn Statement and Spending Review statement includednew finance loan products to support companies with R&D, replacing some existing grants from UK innovation agency Innovate UK.
