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Surge in small firms using R&D tax credits

The number of small businesses claiming tax credits for research and development (R&D) has risen by 30%, according to HM Revenue & Customs (HMRC).

The tax department revealed 13,010 small businesses claimed £600m of credits for innovative research from 2012 to 2013 under the SME tax relief scheme, the highest amount since the initiative was introduced in 2000. The figure compares to 10,030 in 2011-12 and 8,280 in 2010-11.

The increase in small business claims is thought to be a result of policy changes introduced in April 2012. The minimum spend of £10,000 was removed, which means that firms investing in research and development on a smaller scale have now been able to get their hands on tax credits.

Andy Nash, tax director at Baker Tilly, said: "There has been a huge rise in the numbers of SMEs claiming this type of tax relief, due in large part to the increase in the enhanced expenditure for SMEs which came into force from 1 April 2012, but this doesn’t tell the whole story.

"Perceptions are changing, and 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."

The report showed that around half of companies claiming were based in London and the South East. Businesses in the North East claimed the least.


Source: Businesszone.co.uk

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