51% of small business owners haven’t heard of research and development (R&D) tax relief, according to a report by Catax.
The survey of 500 enterprise owners revealed that, even among those that are aware of the incentive, a large percentage don’t believe their own business would qualify.
44% of respondents mistakenly believe that R&D is solely reserved for specialist tech, drug and science businesses, whereas in reality, R&D can potentially be claimed by any firm in any sector.
57% of those surveyed even say they’ve “developed a new product or service, and/or implemented a new business process over the past two years” — the basic requirement for an R&D tax claim.
Another misconception, believed by 43%, is that any eligible R&D activity has to be successful and integrated into a business for a claim to be made.
This is not true, however, as the outcome of the R&D is irrelevant – what matters is the time and money spent.
Mark Tighe, CEO of Catax, said:
“With its desire to future-proof the UK economy, the government is doing its level best to raise awareness of R&D. But the results of this survey show that the majority of UK small businesses are still unaware that this valuable and widely available tax relief even exists.
“Even where businesses have heard of it, there’s a belief that only major pharmaceutical and science companies with high-tech laboratories carry out R&D, but this simply isn’t true.
“In reality, a restaurant creating a new recipe, a brewery experimenting with a new pint or a business trying to streamline its IT with some proprietary cloud technology could all be eligible for R&D.
“The ‘people in white coats’ myth urgently needs to be debunked because currently are losing out not just financially but strategically: R&D can put them one step ahead of the competition, both at home and overseas.”
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