Small firms miss out on tax credits

Around a quarter of all small businesses are unaware that they can claim tax relief on R&D spending. According to a survey carried out by Deloitte, only 45% of eligible companies are claiming R&D tax relief, while 24% do not know that it exists. David Cobb, head of R&D tax services at Deloitte, said: “The reliefs cover much more than traditional scientific research, and specifically apply to experimental development activities in manufacturing and software. Any company developing new products, materials, processes or services may be eligible.” Deloitte interviewed 563 companies with up 250 employees. Around 80% of companies that had not claimed any relief employed fewer than 50 people. “It's ironic that the firms that can benefit most are the ones that are missing out,” said Cobb. There are large regional differences in the number of SMEs making claims. Fewer than 10% of firms questioned in the Midlands are applying for the tax relief, and only one-third of those in the North East and South West. However, 55% of eligible companies in London, Scotland and Northern Ireland have claimed.