Half of SME business owners have never heard of R&D tax relief

Despite renewed focus on R&D by the government in its Spring Budget, 51 per cent of UK SME owners and managers have still never heard of it.

More than half (51 per cent) of SME business owners and managers in the UK have never even heard of Research and Development (R&D) tax relief, according to the results of a new survey published today by Catax, the specialist tax reliefs expert.

But with 57 per cent of respondents saying they have developed a new product or service, and/or implemented a new business process over the past two years — the basic requirement for an R&D tax claim — most SMEs would be eligible for tax relief.

And despite the Chancellor reiterating the importance of R&D in the Spring Budget, over four in ten SMEs (44 per cent) think it is restricted to specialist tech, drug and science companies. In reality, relief can be claimed by companies of all sizes from all sectors.

Two fifths (43 per cent) of UK SMEs also mistakenly believe that any eligible R&D activity has to be successful and integrated into a business for a claim to be made. This is not true: the outcome of the R&D is irrelevant – what matters is the time and money spent.

The ongoing lack of awareness around R&D and the eligibility criteria that apply to it is costing the UK’s SMEs potentially hundreds of millions in tax relief each year. To date, for example, the average tax benefit for clients of Catax is £39,000.

Mark Tighe, CEO, Catax, comments, ‘With its desire to future-proof the UK economy, the Government is doing its level best to raise awareness of R&D. But the results of this survey show that the majority of UK SMEs are still unaware that this valuable and widely available tax relief even exists. Even where businesses have heard of it, there’s a belief that only major pharmaceutical and science companies with high-tech laboratories carry out R&D, but this simply isn’t true.

‘In reality, a restaurant creating a new recipe, a brewery experimenting with a new pint or a business trying to streamline its IT with some proprietary cloud technology could all be eligible for tax relief. The ‘people in white coats’ myth urgently needs to be debunked because currently SMEs are losing out not just financially but strategically: R&D can put them one step ahead of the competition, both at home and overseas.’

Further reading on R&D tax relief

Owen Gough, SmallBusiness UK

Owen Gough

Owen was a reporter for Bonhill Group plc writing across the Smallbusiness.co.uk and Growthbusiness.co.uk titles before moving on to be a Digital Technology reporter for the Express.co.uk.

Related Topics

R&D Tax Credits