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7th June 2022

Tax relief available for businesses who innovate

Innovation can open the door to new markets, improve services and practices so that a business can become more efficient and help you stand out in a competitive market.

Businesses in Wales who innovate could also be eligible for a range of tax reliefs and incentives.

Here we highlight some of the reliefs that innovative Welsh businesses can claim for:

Creative industry tax relief

Eligible businesses in the creative industries can increase their amount of allowable expenditure by claiming a reduction in their corporation tax. The relief is available to creative businesses who are responsible for all stages of production and create content that is certified as British.

Relief is available for the following activity: animation, children’s television, film, high-end television, museums and gallery exhibition, orchestra, theatre and video games.

Patent Box incentive

The Patent Box incentive encourages companies to keep and commercialise intellectual property in the UK, as well as develop new and innovative patented products. By electing into the Patent Box, businesses can apply a reduced rate of corporation tax to profits attributable to qualifying patents, whether they are received as royalties or embedded into sales prices.

Research & Development tax relief

The research and development tax relief encourages innovation and is claimed by SME and large companies who develop new products, processes or services that make an advance in science or technology.

Qualifying SMEs will be able to benefit from a super-deduction of 230% (130% of their qualifying costs from their yearly profit plus the normal 100% deduction) and claim a tax credit of up to 14.5% if the company is loss making. The relief is based on the company’s expenditure on research and development.

Venture capital schemes

Venture capital schemes are designed to help SMEs grow and raise funds by providing a range of income tax and capital gains tax reliefs to attract investors. These schemes include the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trust (VCT).

EIS and VCT investors can benefit from 30% income tax relief, with no capital gains tax on disposal or an exemption from capital gains tax respectively. SEIS applies to businesses that are less than two years old and offers 50% income tax relief.


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