Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if she will take steps improve accessibility for high-growth SMEs to the research and development tax credit system.

The Government recognises the important role that R&D plays in driving innovation and economic growth as well as the benefits it can bring for society. The UK’s R&D tax reliefs have a key role to play in supporting R&D investment in a fiscally sustainable way.

R&D intensive, lossmaking, small and medium-sized companies (SMEs) qualify for an enhanced rate of relief (“ERIS”). This gives eligible companies a cash value of £27 for every £100 spent on R&D. The Government expects around 20,000 SMEs annually will benefit from this support, which is worth around £600 million per year.

To give additional certainty and assure compliance HMRC offers an Advanced Assurance scheme to eligible SMEs (companies with a turnover of below £2 million and less than 50 employees) claiming R&D tax relief for the first time.

To further support accessibility, HMRC publishes comprehensive guidance and has produced new “guidelines for compliance” explaining what is and is not R&D.