22 Feb 2023
The Federation of Small Businesses (FSB) has urged Chancellor Jeremy Hunt to 'change its course' on its plans to slash Research and Development (R&D) tax support for small and medium-sized enterprises (SMEs).
Research carried out by the FSB showed that one in five small firms which invested in R&D in the last three years believe slashing tax relief will reduce their viability. 64% of small businesses which received the tax relief are now less likely to invest in R&D, the FSB revealed.
24% of firms said that they will have to turn to lower risk projects, whilst 12% said they will have to pause recruitment plans or make employees redundant.
'The UK risks being left in an innovation wasteland if Jeremy Hunt does not take control of Treasury innovation policy and restore the single most successful industrial policy of the last decade,' said Martin McTague, National Chair of the FSB.
'Our findings are a reminder to the Chancellor that the government still has time to do the right thing – delay or scrap the plan to cut R&D tax credits for small businesses from April.
'The Chancellor's decision to rely on estimates that exclude the impact on start-ups and new entrants in making this decision was incredibly disappointing – the kind of basic error that leaves even the best idea for a prototype a smoking ruin on the ground, not worthy of a country with our history of innovators, innovation and enterprise.'