The latest figure from HM Revenue & Customs (HMRC) has revealed that more than 52,000 small and medium-sized businesses made research and development (R&D) tax credit claims in the 2018-19 tax year, but thousands more could benefit from this scheme.
Due to the two-year period for making R&D claims, the information provided by HMRC is always backdated, however, the latest data shows that many firms still may be missing out.
Approximately £6 billion of R&D tax credits were claimed during the 2018-19 tax year, with around half coming from the SME scheme.
This equates to a 19 per cent year-on-year increase, which indicates that many more firms are becoming aware of the opportunities on offer from the R&D tax relief, and yet estimates suggest that this scheme continues to be underutilised.
Additionally, the £6 billion total is a long way short of the UK Government’s new commitment of £22 billion in R&D tax relief by 2024-25.
This suggests that further education about the benefits of R&D relief is needed, as well as a simplification of the claims process, for which there is a consultation already underway. Alongside this, the Treasury is committed to supporting all eligible claims, with 95 per cent of claims now processed within 28 days of submission.
If SMEs are engaged in an eligible R&D project, they can claim additional relief equivalent to 130 per cent of qualifying expenditure, offering them a 230 per cent reduction in taxable profits. Firms with surplus tax losses can surrender these in favour of a repayable cash tax credit.
If you think you or a business you support might be eligible for a claim, but you need support to complete the claims process, our innovative, cloud-based software is here to help.
Made.Simplr can quickly and easily automate R&D tax credit claims, by pulling information from existing platforms to create a ready to submit report.
To find out more about our innovative solution, please arrange a demo with our team today.