Tax Credits for UK small businesses will increase from 1 August 2008

The UK Exchequer Secretary to the Treasury announced that tax credits for small businesses who invest in research and development will increase by £80 million a year from 1 August 2008.

This will increase the tax relief in this field for small businesses to £300 million a year.

The tax credit rate available for small businesses spending on research and development will increase to 175% of their investment.

The definition of a small business for this tax credit is up to 500 employees, an increase from 250 employees, with a doubling from the previous level of their revenue and balance sheet valuation.

The tax credits were started in 2000 for small businesses and extended to include large companies in 2002.

The UK government’s goal is to have research and development investment at 2 ½% of Gross Domestic Product in 2014.

This is an additional benefit for UK small businesses who are finding trading conditions difficult in the current depressed economic environment.

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