HMRC has recently released research and development (R&D) tax relief statistics which show the number of claims rose by 22% from 2015/16 to 2016/17 with over 52,000 claims. However, the value of claims grew by only 14% over the same period to a total of £4.4bn. This is a reflection of the increasing number of lower value claims, indicating growing engagement with smaller businesses.
It also looks as though this strong growth will continue in 2017/18. Current claim values stand at £4.3bn with three more months available to claim in this period and reported delays in processing claims by HMRC meaning there has been a lag.
So what does this actually mean to a business? The Government regards investment in R&D as crucial to economic success and R&D tax relief is designed as an incentive for UK companies to invest in innovation. The relief can be extremely generous and enables the company to accelerate its R&D programme and invest a greater proportion of its profits into such things as hiring new staff or investing in new machinery.
Across the country claims are dominated by the manufacturing, information and communication and scientific sectors, accounting for 68% of the total number of claims and 73% of the total amount claimed. The real growth sectors outside of these include construction which has grown 44% from the previous year.
Since the scheme was first launched in 2000 over 300,000 claims have been made and £26.9bn of tax relief has been claimed.
Stuart Rogers, head of innovation at PKF Francis Clark commented “It is fantastic news that this valuable tax relief is continuing to show strong growth, both in number and value. Whilst manufacturing and technology businesses also dominate claims across our client base, we see huge opportunities for clients in other sectors including agribusiness, marine, construction and food & drink – all of which are major areas of sector expertise for PKF Francis Clark.
“The biggest challenge that we face is that a lot of businesses don’t believe it would apply to them but you would really be surprised! We help a lot of businesses of all sizes realise that they can claim for R&D. As a firm we are committed to supporting our clients to make sure that we maximise relief value, providing a significant cash flow boost.”
PKF Francis Clark is a firm of chartered accountants and business advisers, with eight offices throughout the South West.