Small firms missing R&D tax breaks

Small businesses are missing out on millions of pounds of government tax breaks designed to encourage innovation in the UK, according to research by business advisory firm Deloitte. Less than half (45 per cent) of eligible small and medium sized enterprises (SMEs) are taking advantage of research and development (R&D) tax relief, and almost a quarter (24 per cent) that haven't claimed are unaware that the incentive exists.

Of the 563 companies interviewed, over 80 per cent that have yet to make a claim employ less than 50 technical staff, suggesting that the scheme is not reaching the smaller enterprises that could most benefit from the cash flow boost of the repayable cash credit.

David Cobb, head of R&D tax services at Deloitte, said, "It's ironic that the firms that can benefit most are the ones that are missing out. The reliefs cover much more than traditional scientific research performed by people in white coats, and specifically apply to experimental development activities in manufacturing and software. Any company developing new products, materials, processes or services may be eligible to claim tax relief."