Chancellor Jeremy Hunt said on Wednesday he will combine the present R&D expenditure credit and SME schemes and lower the rate at which loss-making tech firms are taxed, from 25% down to 19%

The UK tech industry has welcomed the Chancellor’s plans to create a new “simplified” research and development tax relief scheme in his Autumn Statement but has cautioned there is still work to do.

Chancellor Jeremy Hunt said on Wednesday he will combine the present R&D expenditure credit and SME schemes and lower the rate at which loss-making tech firms are taxed, from 25% down to 19%.

Hunt has also reduced the threshold for additional support for R&D-intensive loss-making SMEs to 30%. The Chancellor, who disclosed this policy in the spring, said it will now benefit a further 5,000 SMEs.

Dom Hallas, executive director at the Startup Coalition, is “pleased” about the changes to R&D tax credits. He said: Allowing more startups to access the enhanced credit will mean more innovation. The scheme still has its shortcomings, but as a result of the Chancellor’s action the policy is better today than it was yesterday.

It is going to be a long road to delivery but getting the process rolling, schemes gradually consolidated and the BBB vehicle established are a key starting point, Hallas said.

Hunt had earlier come under fire by small businesses when he tried to scale back R&D tax credits for startups last year, which the Federation of Small Business cautioned would create an “innovation wasteland”.

Chief executive of Founders Forum Group, Carolyn Dawson, said the simplified R&D relief will cheer UK business founders.

While we await the full detail, we hope today’s announcements will turbo-charge a generation of small and early-stage businesses, who may now find it easier to access the vital funds to develop groundbreaking ideas and maintain the UK’s position as a hub of global innovation, Dawson added.

Dr Simon Thomas, the chief executive and co-founder of British chip firm Paragraf, has earlier been critical of government support for his sector. But Thomas said there are “many positives for businesses” in the Autumn Statement.

Thomas said: The reform to the R&D tax credits scheme is a “much-needed saving” and planning reforms are “very much needed by firms like Paragraf, seeking to expand and acquire new sites in the UK, as the delays from the current system have been detrimental to the expansion and success of UK Businesses”.