Report reveals R&D Tax Relief Claims are rising

If you are not claiming this Government incentive, the chances are your competitors are.

Last month the Government released new figures in relation to companies claiming R&D (research & development) tax credits, and the outlook is positive.

In the eighteen years the tax relief incentive has been implemented, there is an upward trend of UK businesses discovering and utilising the initiative. Over 240,000 claims have been made in that time – a total of £21.4bn being claimed.

What are R&D Tax Credits?

The UK Government is aware that Britain is world-renowned for being a force in innovation and research. However, innovation is not cheap, so back in 2000 they introduced R&D tax credits.

These tax credits were put in place to encourage innovation in UK companies, in order to ensure they can compete with the biggest global superpowers.

Paired with special funding, grants, and various other hand-outs, R&D tax credits now help businesses put money into experimentation, research and development, without having to worry about the cost of any losses. They work by either reducing a company’s liability to corporation tax or by making a direct payment to the company.

These tax credits can help companies of various sizes across different industries take on new innovations that can get new products onto the market, or re-invent existing products to make them more efficient.

R&D Tax Credit Claims are on the up

For 2016-17, 39,960 R&D tax credit claims were made, with over 34,000 of these being made in the SME R&D scheme. This figure is still incomplete, however. Due to the delay in reporting, this figure is expected to rise, meaning the amount will equal the highest ever tally in the 18 years since the tax relief initiative has been in place.

The Government report also hinted at businesses understanding the claims process a little more. The total amount of R&D support claimed by businesses actually increased by a staggering 25%. It would seem this was due to businesses having a better understanding of what they can and cannot claim for.

This brought the total claimed for 2016-17 to £3.7bn, an average of £53,000 per claim.

What kind of companies are claiming R&D Tax Credits?

The HMRC report shows that the sectors that benefitted the most from this tax relief in 2016-17 were:

Manufacturing;
Professional, Scientific and Technical;
Information and Communication

These sectors had the greatest volume of claims. Combined, they accounted for a total of 71% of all claims, and 75% of the total amount of money claimed for 2016-17.

However, this figure may be slightly misleading, as many more companies can, and do, apply for tax credits. Currently, the industries that can apply for R&D tax credits include, but are not limited to:

Audio and Visual
Building Technologies
Commercial Printing
Creative Digital and Media
Food and Beverage
Health
Manufacturing and Engineering
Marine
Motor Racing
Pharmaceutical
Software Development
Technology
Telecoms
Web Development

The tax relief also covers both SME and large companies, in all of these industries, with SMEs taking up the majority of claims.

Ensure your competitors aren’t getting one up on you

While the trend is positive, the report suggest many companies who are eligible are still not claiming R&D tax credits. There were nearly 7,000 first time applicants last year, and if your company was not one of them, your competitor may well have been.

Samantha Holloway, CEO of rdtaxcredit.org.uk, commented:

The outlook of these figures is undoubtedly positive, however there is still a lot to in relation to educating UK businesses about this Government incentive.
We often speak to business owners who simply have no idea this relief existed. If companies are not claiming this tax relief, they may not be innovating to the best of their ability.

How can rdtaxcredit.org.uk help?

At rdtaxcredit.org.uk, we understand that beginning to think about claiming R&D Tax Credits may be a little daunting. We want to help you through the process, to ensure you receive the financial reward that the Government wants to give you.

We offer a friendly and professional approach to R&D Tax Credits which includes: