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R&D investment grows as SMEs chase innovation

POSTED: 21st August 2014
IN: Business news
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New evidence has emerged on the crucial role small businesses play in driving innovation, as HMRC reveals SME Research and Development tax relief claims increased 30 per cent in the space of a year.

undefinedThe SME R&D tax relief scheme, introduced in 2000, aims to boost innovation within the UK economy by encouraging smaller firms to invest in forward-thinking research projects and technological advancements. Uptake rates for the scheme have continued to grow rapidly over the past five years, to reach a new high of 13,010 cases in 2012-13, signifying nearly £600m worth of claims.

"There has been a huge rise in the numbers of SMEs claiming this type of tax relief,” comments Baker Tilly R&D Tax Director Andy Nash, pointing to enhanced expenditure allowances which came into force in April 2012.

Reports suggest manufacturing business continue to represent the scheme’s primary recipients, making up almost a third of all claims, with major implications for the sector’s ability to compete on an international scale.

“The continued strong uptake of the R&D tax credit is good news, as it supports companies seeking to bring new products and services to market,” confirmed Felcity Burch, Senior Economist at EEF, concluding, “Its position within the innovation landscape must be maintained.”

Alongside manufacturing, a significant number of IT and communications SMEs have also taken an interest in the scheme, with the South East, home to London’s thriving tech start-up scene, seeing the greatest number of claims. In future though, Nash expects to see this audience broadening further still.

“Perceptions are changing,” states Nash, elaborating, “Many SMEs are realising that R&D tax relief isn’t just for the manufacturing or tech sectors and can apply to many other sectors that are developing innovative products or processes.”

Aldermore strongly believes in the small business community’s ability to bring new, boundary-pushing developments to the UK economy, and welcomes news that SMEs from all industries are increasingly taking full advantage of this important scheme.

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