- Despite renewed focus on R&D by the Government in its Spring Budget, 51% of UK SME owners and managers have still never heard of it
- Even when they are aware of it, a large percentage believe it’s restricted to science, drug and tech companies employing ‘people in white coats’
- Over four in 10 SMEs mistakenly believe that R&D activity has to be successful and integrated into a business for a claim to be made
More than half (51%) of SME business owners and managers in the UK have never even heard of Research & Development tax relief, according to the results of a new survey published today by Catax, the specialist tax reliefs expert.
But with 57% 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 R&D tax relief.
And despite the Chancellor reiterating the importance of R&D in the Spring Budget, over four in 10 SMEs (44%) think it is restricted to specialist tech, drug and science companies. In reality, R&D can be claimed by companies of all sizes from all sectors.
43% 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 R&D tax benefit for clients of Catax is £39,000.
Mark Tighe, CEO, Catax, told My Entrepreneur Magazine: “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 R&D. 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.”
Kizzi Nkwocha is the editor of My Entrepreneur Magazine and publisher of The UK Newspaper, The Property Investor and Gold, Oil and Diamonds, the net’s fastest growing wealth creation publication. Kizzi Nkwocha made his mark in the UK as a publicist, journalist and social media pioneer. As a widely respected and successful media consultant he has represented a diverse range of clients including the King of Uganda, and Amnesty International. Nkwocha has also become a well-known personality on both radio and television. He has been the focus of a Channel 4 documentary on publicity and has hosted his own talk show, London Line, on Sky TV. He has also produced and presented both radio and TV shows in Cyprus and Spain.