Although most start-ups have innovation at their core, many of them fail to claim an important source of income, namely Research and Development (R&D) tax credits, which can amount to thousands of pounds.
Research has found that 76 per cent of small businesses in the UK have made some kind of significant improvement to their business in the past three years, which could be anything from new software to a change in organisational structure,
However, most appear to be unaware that this would probably qualify them for R&D tax relief and believe that only things like market-changing inventions would be eligible.
For a start-up, the money they would get back could mean the difference between survival and going under. Moreover, this is money that the Government wants to give to small businesses, which it views as the backbone of the economy.
To combat this apparent hiatus, the Federation of Small Businesses (FSB) is calling on the Government to introduce a new tax credit for what it calls the “time-poor” small businesses that cannot afford to take time out to see whether they are eligible. As a spokesman for the FSB pointed out, the current system of initiatives that should be fostering innovation within small firms is clearly not working as well as it should.
Meanwhile, another commentator remarked that, while the R&D tax credit scheme is becoming increasingly recognised by businesses and start-ups, its range remains much larger than many people believe.
Unfortunately, however, due to this lack of knowledge and awareness about R&D, many start-ups are missing out on valuable financial support.