Tax Credits to encourage small businesses to invest more in research and development will increase by £80 million a year from 1 August, bringing the total tax relief available to around £300 million a year.

The increased tax relief, announced today, hopes to encourage more of the UK's innovative small and medium companies to invest in developing new and improved products.

To enable companies to claim the additional tax relief, the rate available for qualifying small and medium-sized enterprises (SMEs) investing in R&D will increase from 150 per cent to 175 per cent of their investment.

The size of company that can qualify for tax relief will also increase, from 250 employees to up to 500 employees, with the associated limits on balance sheet value and turnover also doubling. The increase will help SMEs to grow into large R&D firms by continuing to provide the benefit of a higher rate of relief up to these new, higher limits.

---