R&D tax relief claims see a rapid increase to £3.7bn
More and more science and technology researchers are getting much-needed money from the government under a tax-back scheme designed to support innovation. Recent figures from HMRC suggest that 43,000 companies claimed a total of £3.7 billion in research and development tax relief in 2015-6, an increase of 22 per cent compared with the previous year.
Further, almost 40,000 businesses have already claimed £3.5 billion between them for 2016-7, according to the latest information – with claims still coming in. (Final figures will be available in autumn 2019.)This brings the total number of r&d tax claims since 2000-1, when the scheme was launched, to more than 240,000, totaling £21.4 billion between them.
What are research and development tax credits?
Research and development tax relief is a government scheme designed to help make it easier financially for businesses to advance their field through research and development. It covers a variety of sectors, from pharmaceuticals and medical research to IT, engineering and even areas like architecture, aviation and shipbuilding.
Any business of any size can apply, whether they’ve made a profit or a loss, and even if their research has so far not been successful. There are two categories: the more generous SME category, for businesses with fewer than 500 employees and a turnover of less than €100 million (£87.4 million), and the Research and Development ExpenditureCredit for larger organisations.
Small and medium-sized businesses may get up to a quarter of their eligible costs back (a third if they are loss-making), while larger companies can claim 12 per cent of their costs. Of the businesses which have claimed for 2016-7 so far, 34,060 are small and medium-sized enterprises and 5,900 are large companies.
The increase in the number of claims from small businesses compared with previous years is, the government suggests, in part due to a change in the rules in 2012, when HMRC removed the requirement for businesses to have a minimum research and development spend of £10,000. Since then, businesses have been able to apply to no matter how small their project.
Could your business be eligible?
In order to be eligible, your project must be seeking an advance in knowledge through the resolution of scientific or technological uncertainties. This description, while vague, allows for all sorts of activity within a range of industry sectors to qualify for the relief.
If you think your business is undertaking work that looks to solve problems scientifically or technologically, in a way that can’t be worked out by another competent professional in the field, you could be eligible for R&D tax credits.
At R&D Tax Solutions, we’re experts on the claims process and have helped hundreds of businesses make successful claims. Our R&D tax specialists can help with everything from the calculations to liaising with HMRC on your behalf. Use our r&d tax credits calculator online to discover what your claim could be worth or contact us today if you’d like confirmation that your project qualifies.