R&D tax credits on the rise

Book a Free Consultation
Or call us on 01604 660661

 The number of claims for research and development (R&D) tax reliefs submitted by companies in 2014-15 rose by 12% year-on-year, while the level of support provided was up by 38%, according to statistics released by HMRC


The latest data shows that companies submitted 22,445 claims for R&D tax reliefs in 2014-15, up from 20,100 in 2013-14.

The increase was primarily driven by a rise in the number of SME claims, which totalled 18,630 in 2014-15, up from 16,005 in 2013-14. The number of claims is distinct from the number of returns (21,525) as a return can include more than one claim, e.g. where there is a claim for both the large company scheme and Vaccine Research Relief.

The total amount of R&D support claimed rose to £2.45bn, an increase of £675m (38%) from the previous year.

The cost of support for the SME scheme rose by £325m to just over £1bn, while the cost of the large company scheme fell to £165m. HMRC’s analysis says this reflects the switch over to the R&D Expenditure Credit (RDEC) scheme, which rose to cost just over £1.1bn in 2014-15.

The total value of R&D expenditure against which claims were made was £21.8bn in 2014-15, an increase of 31% from the previous year.

HMRC says R&D claims and the amount claimed continue to be concentrated among companies with a registered office in London, the South East or the East of England (47% of all claims and 63% of the total amount claimed). However, the regional split is based on the registered head office location so may not be where all of the R&D activity took place.

The manufacturing, professional, scientific and technical, and information and communication sectors continued to have the greatest volume of claims, making up a total of 75% of claims and 77% of the total amount claimed for 2014-15.

Since the launch of R&D tax reliefs in 2000, over 140,000 claims have been made, with almost £14bn claimed in tax relief.

By the end of 2014-15, 39,360 different companies had made claims under the SME scheme since it began in 2000-01, and 9,030 under the large company and RDEC schemes, which launched in 2002-03 and 2013-14 respectively.

Beware though the R&D "experts", many of whom are unqualified and unregulated and charge 30% of the tax that they claim. This gives them a vested interest in maximising the claims and leads to some dubious claims. Of course it"s you that gets the penalty for any incorrect claim. We"ve seen cases where the "expert" has pocketed the 30% for a dubious claim and then not been in existence when HMRC successfully challenge the claim, leaving the company in a desperate financial position.

Follow Us