A Survey By Baker Tilly Found Businesses In The County Are Missing Out On Tax Incentives

A survey by accountancy firm Baker Tilly has found there is low awareness of SME tax incentives among businesses in Yorkshire.

Studies conducted by the firm found only 15 per cent of 750 small firms knew what research and development tax credits are - despite the fact the policy is nearly 14 years old and has become a backbone of the nation's economic policy.

First introduced by the Labour party in 2000, SME tax breaks are meant to encourage innovation among startups that would otherwise have to pay thousands of pounds to HM Revenue and Customs, reports Yorkshire Business Daily.

In fact, Baker Tilly's study further revealed that the majority of research and development tax breaks claimed were by large companies (£780 million) as opposed to SMEs (£420 million) - something that will worry government ministers.

Neil Sevitt, Baker Tilly's head of SME services in Leeds, said: "Our survey supports what we already suspected, that many UK SMEs are missing out on generous tax incentives, and this may be particularly true in Yorkshire where SMEs account for only seven per cent of UK claims for research and development tax relief.

"The government certainly needs to do more to raise awareness, but firms in the region should also be asking more questions to find out what’s available."

However, despite poor uptake of government-backed tax benefits, SMEs continue to grow across the UK.

Recent figures published by the National Association for Commercial Finance Brokers (NACFB) show that the number of small businesses in the UK rose to a post-recession high of 2.16 million.

England was the best UK nation in terms of SME growth since 2011, recording a rise of 4.6 per cent, while Scotland also performed well at 4.5 per cent.

However, the NACFB figures also revealed some room for improvement, as Wales only managed an increase of 0.3 per cent and Northern Ireland's small business population dropped by 1.9 per cent.

Expert Opinion

Small businesses are seen by many as key to the continued improvement in the economy, but it cannot be ignored that they themselves often need support in order to stand any chance of achieving their potential. Central to this are the government initiatives designed to support them, including research and development tax credits. <br/> <br/>"We would urge growing companies to go out and seek advice on the options available to them, so that they are fully primed and prepared to take advantage of any opportunities which may come their way in the New Year. <br/> <br/>"Starting a small business is a hugely difficult process, but having the right knowledge on board and the right incentives to hand will prove absolutely essential if entrepreneurs are to make a success of their ventures." Steven Beahan - Partner