Start-ups urged to check their eligibility for R&D tax credits

Just 18,630 small firms claimed government R&D tax credits in 2014/2015, an increase of only 16% on the previous financial year

UK start-ups are being urged to check whether or not they qualify for R&D tax credits as figures from HMRC reveal many are ‘missing out’.

Just 18,630 small firms claimed R&D tax credits in 2014/2015, an increase of just 16% or 2,625 businesses on the previous financial year.

It’s suggested that the more ‘generous definition’ of what constitutes a small business, with respects to applicants, is relatively unknown to many.

To qualify, start-ups must employ fewer than 500 people, and have either an annual turnover of no more than €100m or a balance sheet total not exceeding €86m.

Designed to encourage greater innovation spending by UK companies, R&D tax credits can be accepted as a tax relief or cash payment.

Since their introduction in 2000, £14bn worth of R&D tax credits have been claimed by UK businesses.

Matt Watts, director in tax services to businesses at Smith & Williamson, said:

“Companies in the early years of trading are often under pressure from a cashflow perspective. If the company is spending money innovating and advancing technology, a claim for R&D tax relief resulting in a cash repayment can be extremely valuable.”

Think your start-up could qualify? Read our guide and R&D tax credits.

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