HMRC issued statistics relating to research and development (R&D) tax credits in late September. The report details the uptake of R&D tax credits from their introduction in 2000 to 2016-2017 and is based on a summary of all returns received prior to the end of June 2018. These figures show a reassuring upward trend in the numbers of claims submitted, which will hopefully lead to a substantial increase in business innovation within the UK.
What are R&D tax credits?
The government introduced R&D tax credits to encourage higher levels of business spending on innovations and they are designed to either cut a business’ liability for corporation tax or to make payments to the company, generally in the event of making a loss.
The scheme for SMEs was launched in 2000 and there are three R&D tax credit schemes in place at present:
– For SMEs
– A large company scheme, which was introduced in the year 2002
– Research and development expenditure credits (RDEC)
SMEs have the ability to claim higher rates of tax relief than large companies, and if an SME has no tax bill to reduce, it is possible to claim cash payments instead.
More about these UK R&D tax credits statistics
Since launching these tax credits in 2000, more than 240,000 claims have been received, totalling £21.4bn, and most of these claimant firms are SMEs. The availability of tax credits helps innovative businesses and startups grow to reach their full potential.
Of the 39,960 R&D tax credit claims made in 2016-2017, 34,060 were submitted via the SME R&D scheme and this total could well increase as it’s possible to make backdated claims for work already conducted.
In total, R&D support claims by companies have increased by 55%. Around 75% of claims are for amounts under £50,000, and the average claim tends to come in at around £53,000.
The HMRC report indicates that: “the ‘Manufacturing’, ‘Professional, Scientific and Technical’, and ‘Information and Communication’ sectors continued 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.”
You can read the complete report from HMRC online, and if your business is considering claiming for R&D tax credits, Cornel Accountants have the expertise and forward-thinking to provide assistance.