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SMEs turn to R&D tax credits in greater numbers

Small businesses in the UK have seen the writing on the wall when it comes to tax planning and have flocked to R&D tax credits to reduce their exposure.

So here’s some good news: businesses have made 16.4 per cent more research and development tax credit claims than they have last year, bringing the final figure for 2011-2012 to just shy of 12,200. The lion’s share of these claims originated from SMEs, which is proof positive that the UK’s smaller firms have discovered that they can use the same tools the larger lads have been using for years.

It’s nice to see that SMEs have finally gotten around to finding legitimate ways to reduce the amount of tax they end up having to pay, if you ask me. For far too long it’s been the larger firms that have harnessed the power of tax breaks, leaving smaller companies struggling to stay afloat with having to pay both their way and shoulder the tax burden of those with large budgets for hiring accountants with deep knowledge of how to get away with reducing their tax exposure without resorting to unethical schemes.

Research and development efforts are absolutely crucial for driving innovation, and it’s good to know that firms have a way to recover at least a portion of the cash they spend on R&D towards new and interesting products and services. Adaptation is key if you want to survive in the current economy, as a company that’s simply offering the same thing as everyone else isn’t going to distinguish itself from its competitors very well, now is it?

SMEs absolutely need to take advantage of this tax credit, as every last penny is so important. To that end, the Government actually designed the tax credit to appeal to smaller firms by providing a higher level of tax relief for SMEs; on top of that, a small business with no tax bill but that spent revenue on research and development can actually get cold, hard cash back from the government instead! How’s that for a slice of fried gold, eh?

If you missed out on this tax credit last year, don’t fret – the scheme isn’t going anywhere. Just make sure you don’t miss it when it comes time to submit your taxes next time, and maybe you can join the ranks of those receiving a kickback from the Government alongside multinationals like Starbucks and Amazon.

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