New statistics released today by HMRC have revealed there was a 12 per cent year-on-year rise in the number of claims for research and development tax credits submitted by companies in 2014-15, with the level of support provided rising by 37 per cent.
The latest data shows that companies submitted 22,445 claims for research and development tax credits in 2014-15, up from 20,100 in 2013-14. The total amount of R&D support claimed rose to £2.45bn, an increase of £675m from the previous year.
The total value of R&D expenditure against which claims were made was £21.8bn in 2014-15, an increase of 31 per cent from the previous year.
First introduced in 2000, R&D tax credits are designed as a tax relief to encourage greater R&D spending and innovation. They work by reducing a company’s tax bill by an additional amount depending on the company’s allowable R&D expenditure. Since launch, over 140,000 claims have been made, with almost £14bn claimed in tax relief.
Over time, the rate of relief has become more generous and is now worth up to 230 per cent for SMEs. This means that for each £100 of qualifying costs, the corporation tax paid by SMEs on income could be reduced by an additional £23.
Commenting on the figures, Colin Smyth, tax partner at RSM said:
‘The rise in the number of claims in 2014-15 is a reflection of the increase in R&D spend during the course of the year as per the Government’s own figures, but it also indicates that awareness of these important tax reliefs is growing. Claims have increased in every area of the UK and interestingly, the number of first time applicants has increased dramatically. This indicates that there are still some companies that are not taking advantage of the tax reliefs that they are entitled to and this is potentially putting them at a competitive disadvantage.’