UK start-ups could lose an average of £100,000 due to changes to the government’s proposed R&D tax credit regime, new research has found.
Research by the Coalition for a Digital Economy (Coadec) shows that start-ups are likely to lose between 30% and 40% of their tax credit savings after the change, averaging £100,000 per company.
Coadec, a non-profit organization representing the policy interests of UK tech start-ups, surveyed over 250 UK founders about their concerns about the changes outlined in the autumn statement.
The new rules will reduce the small business R&D tax concession from 130% to 86% in April and the small business credit rate from 14.5% to 10%.
An overwhelming majority of respondents (97%) agreed that the cuts, if implemented, would have a severe impact on their company.
Additionally, 89% agreed that system changes would make the UK less attractive to startups and investors.
“The data is clear: Startups are terrified of the changes slated for April this year. dear,” said Coadec Executive Director Dom Hallas.
“As a result, the employment and innovation engine of the UK economy will be severely hurt for years to come. I hope the government will reconsider.”
Kramer co-founder and CEO Adam McCann said:
“As the study shows, this represents another blow for fledgling and innovative UK start-ups that have to navigate an already very challenging macro environment.”
The government recently amended its research and development (R&D) tax credit policy, a financial incentive for UK companies to develop new technologies. This has reduced the number of SMEs covered by the scheme.
In December, a number of UK tech companies signed an open letter criticizing the government’s decision. Signatories include Wayve, Ocher Bio, and Thymia.
