HMRC has just released its annual report looking at the statistics behind Research & Development (“R&D”) tax credit claims by businesses, and the numbers make fascinating reading.
For the uninitiated, R&D tax credits are a tax relief introduced some years ago by the Government some years ago, designed to encourage greater R&D spending, leading in turn to greater investment in innovation. They work by reducing a company’s tax bill by an amount equal to a percentage of the company’s allowable R&D expenditure. A company can only claim R&D tax credits if it is liable for Corporation Tax.
HMRC report that between 2000-01, when the R&D tax credit schemes were launched, and 2014-15, over 141,000 claims have been made and almost £14.0 billion in tax relief claimed. This is a huge amount of money.
The total amount of R&D support claimed rose to £2.45bn in 2014-15 – an increase of £675m (38%) from the previous year.
R&D claims and the amount claimed continue to be concentrated among companies with a registered office in London, the South East or the East of England (47% of all claims and 63% of the total amount claimed). This is interesting in the light of recent talk about a “Northern Powerhouse”. Perhaps awareness of the scheme needs promoting more in the North?
The ‘Manufacturing’, ‘Professional, Scientific and Technical’, and ‘Information and Communication’ sectors continued to have the greatest volume of claims, making up a total of 75% of claims and 77% of the total amount claimed for 2014-15.
We at Outhwaite Associates have helped a number of businesses to submit successful R&D claims. Interestingly, a number of those businesses were unaware that their activities qualified for a successful claim until they spoke with us. If your business is involved in any innovative activity, or is developing innovating processes then please do contact us for a no-obligation discussion to see if there is any merit in formulating a claim.