The Federation of Small Businesses (FSB) has criticised plans to reduce research and development (R&D) tax support for SMEs in April.
According to a survey by the FSB, 64% of smaller firms (equivalent to 50,000 businesses) who received the tax relief will be less likely to invest in R&D following the cuts.
A further 25% claim that the reduced levels of support will make their business less viable, while 20% said they will have to turn to lower-risk projects.
In November, Chancellor Jeremy Hunt announced plans to scale back the SME R&D scheme to tackle widespread abuse of the system while offering more generous breaks for larger businesses.
The FSB argues that the move will disproportionately impact SMEs, particularly startups and businesses new to the scheme who "risk everything" on R&D.
Martin McTague, national chair of the FSB, labelled the decision as "not worthy of a country with our history of innovators, innovation and enterprise". He urged the Chancellor to rethink these plans in his upcoming March Budget:
"The UK risks being left in an innovating wasteland if Jeremy Hunt does not take control of Treasury innovation policy and restore the single most successful industrial policy of the last decade."
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