Office for National Statistics (ONS) data suggests more than a third (36%) of all small and medium-sized enterprises across the country engage in innovative activities.
Despite this, fewer than 6% appear to submit R&D tax claims. This means businesses that meet the strict R&D tax qualifying conditions and criteria could potentially be missing out on claims worth tens of thousands of pounds.
The research, conducted by small business accountants, Wellers, also highlights considerable regional variations. Buckinghamshire stands out as the area with the highest potential tax savings — companies there typically save £138,000 on average.
Berkshire ranks second in terms of potential savings, yet fewer than 5% of its businesses involved in innovation appear to be claiming R&D tax relief. Oxfordshire, a county renowned as an innovation hub, similarly sees just 893 (6%) of its innovative businesses filing claims.
The research highlights the potential opportunity for eligible UK SMEs to reduce their tax liabilities. Given the rising tax burden many businesses have incurred since the pandemic, and the vast and complex nature of the UK tax system, making use of all legally available tax avenues as a means of reducing the burden is crucial for both start-up and scaling businesses. Reviewing whether an organisation meets the qualifying criteria for these reliefs is an important part of business planning.
The burden of legislation entrepreneurs and owner-managers have to adhere to is undeniable, but that doesn’t have to be a barrier to growth. Savvy business owners may understand that proactive tax planning is likely to be a necessity. Engaging with a specialist tax advisor early could save a business potentially thousands on its tax bill.
These professionals will conduct a thorough review to identify any applicable allowances, breaks, and reliefs as part of implementing a long-term financial strategy. This includes, but is not limited to, optimising capital allowances, reviewing remuneration package structures, and ensuring compliance with the latest regulations. By doing so, you could reduce your tax liability whilst also creating a solid foundation for sustainable growth.
Get in touch with Wellers’ tax advisors to discuss your business goals.
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Are UK SMEs missing out on valuable Research and Development (R&D) tax relief?