HMRC report shows increase in R&D tax relief claims but many SMEs are missing out on this valuable tax credit
Phil Hartley, tax manager at North West accountancy firm Mitchell Charlesworth comments on the latest research and development (R&D) tax relief statistics from HMRC.
Revised statistics from HMRC for 2015/16 and 2014/15 tax years show a significant increase in the number of R&D tax credit claims being made – 43,040, for 2015/16 and 35,145 for 2014/15 compared to 19,335 in the 2013/14 tax year.
The 2016/17 tax year is also showing an upward projection for claims - 39,960 already submitted up to 31 March 2018 with another year of submissions still to come.
In turn this has led to increased tax relief being claimed – in 2015/16 £3,660bn was claimed, an increase of 22%. In 2014/15 £2,955bn was claimed, an increase of 80%. With £3,450bn having already been claimed for 2016/17, it is likely that we will see another year on year increase in relief.
The biggest concentration of claims remains in manufacturing, IT and professional, scientific and technical sectors as with previous years.
In 2016/17 the North West has seen an increase in the number of claims and tax relief obtained. The average SME claim in the North West is £41,612 compared to the national average of £53,970. The average research and development expenditure credit (RDEC) claim (the scheme used by larger companies) is £307,692 compared to the national average of £553,398.
These latest statistics continue to show that the Government and HMRC are supporting R&D tax relief claims and that awareness of the relief is continuing to grow, however, only 1% of active companies are claiming the relief meaning many SMEs are missing out on this valuable tax credit.
Businesses need to ensure that a claim is valid and that all available costs are considered and captured, which is where we are available to provide advice and support.
For advice and guidance on R&D tax relief and if it is applicable to your business, please contact Phil Hartley, tax manager at Mitchell Charlesworth, below.
Director of Tax0161 817 6100Manchester