Tax break on research work for smaller firms

In the past, when big firms contracted out research and development to SMEs, as often happens in the pharmaceutical industry, smaller companies could not claim tax relief on work carried out as that was offered to the intellectual property right-owner, usually the larger corporation.

Now, however, the Treasury is offering SMEs tax relief on contracted R&D work.

It means they will now be able to claim a £175 reduction in their tax bill for every £100 spent on research.