SMEs receive £80 million R&D tax credit boost

1 August 2008

Small businesses are to get tax credits worth an extra £80 million to invest in research and development as from 1 August.

This will bring the total amount of tax relief available to businesses wishing to develop new and innovative products to £300 million a year, the Treasury said.

The rate available for qualifying SMEs investing in R&D increases from 150 per cent to 175 per cent of their investment.

There are also changes in the rules governing the sizes of business that can apply for the tax relief. This has risen from firms with 250 employees to firms with up to 500 employees, with the associated limits on balance sheet value and turnover also doubling.

Announcing the new credits, Treasury Secretary, Angela Eagle said: “The R&D tax credit schemes are the government’s most important policy in support of R&D investment by companies in the UK. By increasing the value of the SME scheme by a third, we are showing our continued commitment to helping innovative UK companies invest to grow.”

Ms Eagle added: “The announcement will build on more than £1 billion worth of support already provided. The increase in the size at which a company can claim under the scheme will be a huge boost for the small R&D intensive companies that will be the large innovative companies of the future.”