UK businesses claim £3.5 billion in R&D tax relief

The amount of money companies have claimed in research and development (R&D) tax relief savings has increased significantly over the past seven years, according HM Revenue & Customs.

R&D tax credits are a tax relief designed to encourage greater R&D spending, leading in turn to greater investment in innovation. They work by either reducing a company’s liability to corporation tax or by making a payment to the company.

The newly released figures show that to date there have been 39,960 R&D tax credit claims for 2016-17, of which 34,060 are in the SME R&D scheme. This is based on partial data for the year and expected to increase as more returns are received. £3.5 billion of R&D tax relief support has been claimed for 2016-17, corresponding to £24.9 billion of R&D expenditure.

R&D claims are concentrated in companies with a registered office in London, the South East or the East of England (45 per cent of all claims and 60 per cent of the total amount claimed for 2016-17).

Looking across sectors, there was a strong focus on Manufacturing, where 25 per cent of all R&D tax relief claims were made, securing 29 per cent of the total claimed across the UK.

The Information & Communication sector made 26 per cent of claims, accounting for 20 per cent of the total claims. And those in the Professional, Scientific & Technical sectors accounted for 19 per cent of the number of claims and 24 per cent the amount of overall relief secured across the UK.

R&D tax relief has proved to be a major boost to British business and, with Brexit looming, it is more important than ever that companies seek ways to unlock cash from innovation to help fund research and development into the ongoing enhancement of existing products and services.

Does your business undertake research and development?

If so, speak to us today to set the benefits in motion. Our proven methodology offers a painless approach towards obtaining R&D tax relief.

To find out more, contact Steve Govey or your usual Beavis Morgan Partner.

Note: HMRC will publish additional tables in the spring, and these are expected to include R&D tax credits tables including claims by county, region and sector; as well as claims by size by region and claims by size by sector.