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R&D tax credit claims up by nearly a fifth

The latest R&D tax credit data from HM Revenue & Customs (HMRC) shows that the use of the tax relief increased by 17 per cent between 2016-17 and 2017-18.

In total, during the 2017-18 tax year (the latest complete data set available) the amount of support received by businesses via the R&D tax credit scheme was £5.1 billion – a 15 per cent increase on the previous year.

This helped to fund £36.5 billion of R&D expenditure during this period, which again was an increase of eight per cent from the previous year.

When looking at the regional breakdown of claims, most are still being made by business with a registered office in London, the South East or the East of England.

Of course, this may slightly skew the real regional split of funding as it is based on where businesses registered offices are located, rather than were the R&D 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 66 per cent of all relief.

While many claims continue to be made by R&D tax credit ‘veterans’, there were 15,750 first time applicants for R&D tax credits in 2017-18 – a further increase of 10 per cent on the previous year, which was largely driven by those using the SME scheme.

Although a complete data set for the 2018-19 tax year is not yet available, as of 30 June 2020, HMRC reports there had been 59,265 R&D tax credit claims, of which 88 per cent were for the SME scheme.

The data also shows that £5.3 billion of R&D tax relief support has been claimed for 2018-19, corresponding to £35.3 billion of R&D expenditure – a further increase in the tax relief claimed on previous years.

While it is positive to see more and more businesses utilising the support on offer, there are still thousands of businesses, both large and small, out there who are eligible to make a claim but haven’t.

This represents an excellent opportunity for accountancy firms to show off their skills and increase their revenue by utilising our effective cloud-based solution to automate the R&D tax credit claims process.

To arrange a demo with our team to look at the untapped potential of R&D tax credits, please contact our team

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