Changes to the R&D tax scheme
The Chancellor announced that loss-making companies that are taxed within the R&D scheme will now have their rates reduced from 25% to 19%. The threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%, benefiting a further 5,000 SMEs.
The R&D tax relief scheme has also been combined into one, merging the R&D Expenditure Credit and SME schemes.
“The move by the Chancellor to reduce the rate of tax for loss making companies is a significant step in the right direction for the tech startup community,” praises Seb Wallace, Investment Director at Triple Point Ventures.
“By reducing scrutiny and streamlining the process for R&D claims, the government is sending a clear message of support to innovation-driven businesses. This decision fosters an environment where companies can channel more energy and resources into what matters most – groundbreaking research and development,” he continues.
Others similarly applaud the simplification of the R&D tax scheme.
“More funding is pivotal to innovation,” welcomes Clough. “This decision particularly affects AI startups as high computing costs can make research within this sector a very capital-intensive exercise.”
“After last year’s Autumn Statement, we saw confidence amongst UK SMEs drop significantly, with about one-third feeling less confident in their ability to grow,” reminisces Ralph Rogge, cofounder and CEO of Crezco.
“Simplifying R&D tax credits will allow SMEs to invest deeper into technology and innovation, further establishing the UK as a fintech and entrepreneurial powerhouse,” he notes.
For other startups, the measure is still oblivious of early-stage startups and their research and development needs.
“The Chancellor’s raft of announcements today benefit scale-ups and later-stage companies but we are still missing genuine support for early-stage startups,” says Neil Ruth, founder of Well Cell. “Without the right support for homegrown startups, the UK risks losing huge potential from a technical, talent and economic standpoint to more startup-friendly shores abroad right from the earliest days.”
