Are you one of the SMEs missing out on innovation incentives?
03 October 2017
By Rachel Moore
HM Revenue & Customs (HMRC) has released its annual statistics regarding research and development (R&D) credits and Patent Box claims, which make for interesting reading. Small and medium enterprises (SME) companies that are engaged in qualifying R&D activities can claim tax reliefs on the cost of these activities. For UK SME businesses that means they could receive up to £33 of cash support for every £100 of qualifying R&D costs.
Patent box effectively provides a 10% tax rate for UK companies that are exploiting patented intellectual property (IP) rights, reduced from the headline corporation tax rate of 19%.
HMRC latest statistics show UK businesses spent almost £23bn on research and development (R&D) in 2015/16, an increase of 4% from the previous year. The figures showed that total amount of R&D tax relief was £2.9bn in the year (a 20%% increase from 2014/15). The statistics also show that only 523 SMEs claimed patent box. Though this is a significant increase on the previous year, showing increasing uptake as the regime phases in, the number of SME claimants makes up just 3% of those making SME R&D claims, suggesting large numbers are still missing out on patent box.
During he year, 21, 865 SMEs made R&D claims, the highest since the scheme began in 2000/01 (an increase of 22% on 2014/15) but this still means that the large majority of UK SME businesses are not claiming. A significant proportion of the increase in R&D claims was driven by the rise in the number of claims by SMEs.
Many start-ups and small businesses are missing out on claiming up to 33% cashback on their R&D spend as they are not aware of the R&D tax credit regime, incorrectly don't believe they qualify or find it too hard to claim. To make it easier for them to check if they are eligible and claim R&D credits, PwC have launched the online tool Nifty R&D (www.niftyforms.co.uk).
Nifty R&D is the UK's first online R&D tool, which significantly reduces the time and cost to businesses of preparing claims.
For further details speak to me, Chrissie Freear or Samantha Butcher.
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