A joint statement by HMRC and HM Treasury reported that British businesses investing in qualifying science and technology research increased the total spend to £22.9 billion in 2015/16, (up from £22.1 billion in 2014-2015), a sixth successive year of increased qualifying spending.
From advanced engineering to life sciences, R&D tax credits support UK businesses to make the investment they need to innovate so that Britain remains at the cutting edge of technological development.
Scientists creating a new artificial bladder system for patients with urinary difficulties, or specialists developing new IT encryption and security techniques, are just two examples of the qualifying R&D.
Uptake of the R&D reached record levels in the tax year 2015/16 as follows:
- In 2015/16 the total number of claims for R&D tax credits rose to 26,255, an increase of 19% from 2014-15.
- The increase was primarily driven by a rise in the number of SME claims, which totalled 21,865 in 2015/16, up from 17,875 in 2014/15 (22% increase).
- The total amount of R&D support claimed rose to almost £2.9bn in 2015/16, an increase of £470m (20%) from the previous year.
- The cost of support for the SME scheme rose to £1.3bn, reflecting the increase in the number of claims and the rise in the enhanced expenditure rate to 130% in 2015/16.
- The cost of support under the large company and RDEC schemes rose to almost £1.5bn in 2015/16.
- The ‘Manufacturing’, ‘Professional, Scientific and Technical’, and ‘Information and Communication’ sectors continued to have the greatest volume of claims, making up a total of 73% of claims and 75% of the total amount claimed for 2015/16.
Between 2000/01, when the R&D tax credit schemes were launched, and 2015/16, over 170,000 claims have been made and £16.5 billion in tax relief claimed.
Research and Development (R&D) Tax Credits allow companies to claim an enhanced corporation tax deduction or payable credit on their research and development costs. There are two schemes for claiming R&D tax credits: The Research & Development Expenditure Credits (RDEC) and the Small or Medium-sized Enterprise (SME) scheme.
RDEC was introduced in 2013 to replace a previous scheme for large companies. The RDEC offers a tax credit which is paid “above the line” meaning that it has greater visibility in a company’s accounts and provides an immediate benefit to loss makers.
The SME scheme is available to companies with fewer than 500 employees and an annual turnover under €100m or a balance sheet under €86m. It offers more generous relief than the RDEC since small companies find it relatively difficult to undertake and finance R&D.
So many companies are not taking advantage of this opportunity which has its complexities but help can always be provided if needed by Leyton UK to optimise an R&D claim.
Simba, Consultant, Leyton UK