SMEs must start reaping benefits of R&D to stay competitive post-Brexit
The news about the government’s R&D boost is a timely reminder that UK businesses are still losing out on generous R&D tax savings.
Over the last year, HMRC has given out £2.9bn across a range of industries, a 20 per cent increase from the previous year. Around half of this was claimed by SMEs, an average of almost £61,000 per company.
The new data shows the number of claims has risen by 19 per cent, but this is still less than one per cent of UK companies. A large number of eligible businesses are not claiming as they just don’t realise the extent of activities that can be claimed for.
The scheme helps businesses remain competitive in a global market, and any boost is particularly important with Brexit on the horizon. R&D tax relief can provide additional cash tax savings of 26 per cent of a company’s R&D spend, or if not profitable, a cash credit of up to 33.35 per cent.
R&D has a much wider definition than many people think - it’s not just white coats and laboratories. Although there are many claims in software development and manufacturing, successful claims have also been made in industries as diverse as agriculture, construction and hospitality.
The tax relief available is very generous, but businesses need to bear in mind that claims must be properly made to ensure they meet HMRC requirements.