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SMEs unaware of big tax break

MOST small and medium sized enterprises (SMEs) are unaware of a tax break that is a centrepiece of the UK Government's efforts to encourage firms to boost investment in growth, a survey has found.

Only 15% of SMEs surveyed by Baker Tilly, a mid-tier accountancy firm, knew about research and development (R&D) tax credits.

The lack of awareness means firms may be missing out on big savings.

From April 2012, SMEs have been eligible for 225% relief from Corporation Tax on allowable research and development costs.

Robert Ross, Baker Tilly's Managing Partner for Scotland said: 'Our survey supports what we already suspected that many SMEs are missing out on generous Research and Development and other tax incentives.

"The Government should do more to raise awareness of these tax breaks."

Baker Tilly noted official figures showed large companies benefited from 65% of the £1.2 billion R&D tax relief claimed in 2011-12.

SMEs in Scotland filed 585 claims for R&D tax relief worth just £24m in the year.

Only 8% of the 750 respondents knew about the Seed Enterprise Investment Scheme to help early stage companies raise equity funding.

Just 4% knew about the Patent Box measure under which firms pay tax at lower rates on profits earned from the intellectual property they develop.

The R&D tax credit scheme was introduced in 2000-2001 and has been expanded since.

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