David Gauke visited London store Vivobarefoot which has claimed R&D tax relief for five years to launch the plan
David Gauke, the financial secretary to the Treasury, has launched a new R&D plan outlining how the government will make it easier for small firms investing in research and development to claim tax relief.
The two-year plan comes off the back of an HMRC consultation, with the aim of increasing take-up of R&D tax relief through raising awareness of the relief among small businesses, and making it easier for them to apply.
The relief helps firms to reduce the amount of corporation tax they pay on profits by offsetting them against any investment in research and development.
While figures for 2013-2014 showed that more than 15, 000 small and medium-sized firms claimed the relief for that year up 19 per cent from the year before, the government wants to increase this further.
From November, small companies with a turnover under 2m and fewer than 50 employees will be able to seek advance assurance on R&D tax relief. The government hopes this will provide them the opportunity to plan their finances effectively and give them greater certainty.
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.
HMRC evaluation has shown that each 1 of tax foregone by R&D tax relief stimulates between 1.53 and 2.35 of additional R&D investment.
To launch the plan, Gauke visited London-based footwear specialist Vivobarefoot, which has claimed R&D tax relief for five years. The firm designs shoes to prevent common sports injuries caused by standard sports trainers and has since become a market innovation leader.
Vivobarefoot CEO Galahad Clark, said: Innovation is at the heart of what we do. We are proving that the modern shoe industry, with its padding and support are doing more harm than good and the modern world has a movement crisis.
He said it was good to have the government’s support in competing against the biggest brands in the world on what we think is a very important social mission.
SME R&D relief works by way of super deduction, enabling firms to reduce profits liable to corporation tax by 230 per cent of their qualifying R&D expenditure.
Gauke said that R&D was crucial for the long-term growth of the UK economy? and the government needed to go further to support pioneering small businesses.
He hoped the plans would help to increase awareness and make it easier for people to apply.
