Surge in R&D tax credit claims shows Britain is a nation of innovators

Anthony Lalsing - Menzies Accountant

Anthony Lalsing – R&D Director

The statistics have been released by HM Revenue and Customs (HMRC) and they show a research and development claims surge by companies by a hefty 38 per cent.

research and development statistics infographic

For the year to 30 September 2015 a total of £2.45 billion was claimed by Britain’s innovative companies with over £1 billion of this going to small and medium enterprises (SMEs).

Download our Research and development claims surge Infographic in full

This large increase provides excellent evidence that businesses are getting significant support through the R&D tax credit system.

With such assistance available, now is excellent time to find out if your business would benefit too.

HMRC’s Research and development claims surge statistics at a glance

The total amount claimed since R&D tax credits was introduced has now hit £21.8 billion with extremely healthy growth year-on-year.

r&d tax credits infographic
r&d tax claims by geography

The vast majority of claims, almost 75 per cent, are being made by manufacturers, IT developers and professional services such as architects. However, there are still a large number of claims made by companies in sectors such as retail and construction.

London and the South East of England appear to be the focus of R&D claims with 68 per cent coming from this region. However, this is based on registered office and may not represent where the actual R&D is taking place.

An exciting statistic borne out by the data is the number of new business benefiting from the relief with 25 per cent of claims coming from companies aged between 0 and 5 years old.

What is R&D really worth to business?

The main R&D tax credit scheme available to SMEs provides an additional deduction of 130 per cent and a repayable tax credit of 14.5 per cent to loss-making companies.

Essentially, for every £100,000 of R&D expenditure identified a company can receive up to £26,000 of support from HMRC.

This is the most generous relief available to companies and is not limited to those creating brand new technology. Any company that spends time solving problems or making improvements to its goods or services could benefit.

But do I qualify for R&D?

menzies r&d tax credits services infographic

Your company will potentially qualify if you:

  • Create
  • Appreciably Improve, or
  • Replicates

A process, material, device, product or service with a technological / scientific aspect. This can encompass many different activities but a great question to ask yourself is has your company spent time solving problems and/or making technological improvements.

If the answer is YES then you should have a successful claim. The Innovation and R&D Tax Team at Menzies oversee over £9 million of tax savings each year from annual R&D expenditure of nearly £38 million.

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