Last week, HMRC published the latest Research and Development (R&D) tax credit statistics for 2000-02 to 2016-17. So what did it show?
In 2000, the R&D tax relief regime was introduced to encourage UK businesses to invest in innovation and increase spending on R&D. Since the tax relief was launched, over 240,000 claims have been made – totalling £21.4 billion.
SMEs leading the way
The total value of R&D expenditure against which claims were made was £28.9bn in 2015-16, an increase of 16% from the previous year. In 2015-16 the total number of claims for R&D tax credits rose to 43,040, an increase of 22% from 2014-15. According to the HMRC report, “the increase was primarily driven by a rise in the number of SME claims”. The ‘Manufacturing’, ‘Professional, Scientific and Technical’, and ‘Information and Communication’ sectors continue to have the greatest volume of claims, making up a total of 71% of claims and 75% of the total amount claimed for 2016-17.
Chris Knott, our Head of R&D Incentives pointed out that “The Government’s recent statistics have been extremely positive with the obvious upward trend in submitted R&D tax claims. However, there are still a considerable number of eligible companies that are not making, or indeed maximising, claims so we hope this will encourage many other innovative businesses to grow and expand using the R&D incentives available to reach their full potential”. Oh – and by the way – let’s stop calling it R&D.
Making the process pain-free
According to the HMRC report, only 6,570 of the claims made in 2015-16 were made in the Midlands (2,785 by clients situated in the East Midlands and 3,785 by clients situated in the West Midlands). Our R&D Incentives Manager, Donna Challinor suggests “Many companies fail to make a claim for R&D incentives because they are too busy with their day jobs and don’t appreciate the extent to which the work they do can qualify for the R&D incentives. We can work with these companies to ensure the claim process is not onerous and the results could make a significant difference to their company’s cashflow”.
To read HMRC’s full report, click here.