The amount of R&D tax relief claimed by SMEs has increased by a quarter over the past year, but the level of claims is still lower than it should be, and small businesses are not claiming all they are entitled to.
Accountancy firm Moore Stephens says that SMEs claimed £970 million in research and development (R&D) tax credits in the past year, a figure that represents a jump of 24% from £780 million in the previous year.
Small businesses are not aware of their eligibility for tax credits, the firm says, citing the fact that only 17,135 SMEs claimed R&D credits, an increase of just 7% from 15,955 the previous year. Indeed that is put into further relief by the fact that although SMEs account for 99% of all UK businesses, they receive only 48% of total R&D tax credit funds.
‘All businesses need to understand what they are entitled to’
Steven Levine, Partner at Moore Stephens, comments: “Although SMEs claimed close to £1 billion in R&D tax relief, many undertake much more activity that they do not claim on.
“R&D is not solely limited to laboratories and scientists, but is rather about wider technical problem solving. All businesses, especially SMEs, need to understand what relief they can claim or risk missing out on easy savings.”
But will Brexit affect these figures going forward? Levine says there’s a good chance that if the UK is freed from the limits on R&D relief imposed by the EU, SMEs may in fact benefit from more support.
“Although the details would depend on the exact nature of the post-Brexit relationship with the EU, there may be an opportunity for the Government to increase R&D relief which could further enhance the attractiveness of the UK as a place to do business.”