Businesses asked for views on R&D tax relief

A new consultation has been launched to gather the views of businesses on how the government’s research and development (R&D) tax credit regime can be improved.

Small and medium-sized enterprises can claim 225 per cent tax relief on qualifying R&D costs, reducing the income on which they pay corporation tax by £125 on top of the £100 spent. The tax relief rate will rise to 230 per cent from April this year.

But many small and medium-sized enterprises (SMEs) fail to claim because they are not aware of the scheme or think it does not apply to them. To qualify, the R&D must advance science or technology in some way.

Launching the consultation on 16 January, David Gauke, Financial Secretary to the Treasury, said: “R&D investment by smaller firms is vital for the performance of the UK economy, and small and medium enterprises accounted for over 80 per cent of all R&D claims in 2012-13.

“I want to make sure that the relief is accessible for all small companies. That is why we are introducing a new advanced assurance service for small companies making their first claim.

The consultation, which runs until 27 February, will focus on four factors affecting whether companies make claims:

  • awareness of the credits
  • design of the rules
  • understanding of the rules
  • claims processing and administration.

The Moore Thompson team can provide expert advice can help eligible companies with innovation-related tax reliefs, enabling them to gain significant sums to reinvest in business operations. For more information, please contact us.