Are you missing out on R&D tax credits?
20 September 2016
The latest statistics from HMRC show companies are increasingly turning to Research & Development (R&D) tax credits to help fund R&D activities. Just as a reminder of what this is all about, companies that are engaged in qualifying R&D activities can claim tax reliefs or credits on the cost of these activities. SME UK businesses can receive up to £33 of additional cash support for every £100 of qualifying R&D costs, and for large UK companies a cash incentive of up to £9 for every £100 of R&D spend.
The statistics published in September 2016 show the number of claimants have increased by over one third in the 2 year period from 2013 to 2015. This is mainly driven by the number of small and medium sized enterprise (SME) claimants but also shows increases in large company claims as a result of the new large company R&D Expenditure Credit. This suggests that the various improvements to the R&D credits system introduced over recent years are attracting more claimants.
According to the statistics, R&D claims were used to support nearly £20bn of R&D in 2014/15, an increase of nearly 50% from 2 years earlier. The figures show that the UK Government invested £2.45bn in the year on R&D reliefs to support UK business, which is an increase of over £1bn from 2 years earlier. This reflects the more generous rates of relief now available, the ability for large loss making companies to obtain a cash benefit, together with the increase in claimant companies.
Over 20,000 companies made claims in 2014/15, the highest since the scheme began in 2000-01, but this still means that the majority of UK businesses are not claiming. While there has been a noticeable increase in first time applicants, many start-ups and small businesses are missing out as they are not aware of the R&D tax credit regime, incorrectly believe they don’t qualify or find it too hard to claim. To make it easier for businesses to check if they are eligible and claim R&D credits, PwC has launched the UK’s first online tool Nifty R&D (www.niftyforms.co.uk), which significantly reduces the time and cost to businesses of preparing claims.
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