R&D tax initiatives - SMEs fail to optimise

Missing the boat?

Small and medium sized enterprises
The benefit for SMEs is generous, but the rules are complex. Deloitte can provide tailor-made service no matter what the size of your company. Read more about the benefits to SMEs .

Although generous R&D tax incentives are available to encourage innovation in the UK many companies still remain unaware of the potential relief available or are sceptical of their ability to make a valid claim.

The tax incentives work by reducing corporation tax payable for tax-paying companies and are divided into two regimes; one for companies falling within the EU definition of Small and Medium sized Enterprises (‘SMEs’) and one for all other companies (‘LargeCos’).

In March 2006 Deloitte undertook a survey of SMEs across the UK to explore companies’ experiences of the R&D tax relief system. Our aim was to measure actual and potential uptake of the benefit, and to investigate areas of difficulty in claiming the available relief.

In total, we surveyed over 560 companies nationally, spanning a variety of industry sectors. We have developed various reports detailing the analysis and our interpretations.

For further information, read our executive summary and download our publication on the impact of the R&D tax relief on SMEs nationally.

What's to follow?
Changes announced in the last Budget suggest that the definition of SMEs for the purposes of R&D tax credits will be expanded such that the maximum number of employees will be increased from 250 to 500. The Deloitte R&D team is currently researching the perceived impact of this change on companies matching this criterion. The results of this research will be published shortly.