New statistics from HMRC has revealed that there was a 22% year-on-year rise in the number of claims for research and development (R&D) tax credits submitted by companies in 2017-18, with the level of support provided rising by 26%.
The latest data shows that a total of £31.3bn was claimed as qualifying R&D in 2017-18, an increase of 26% from the previous year, with a total of 48,635 claims for research and development tax credits submitted by companies, up from 39,960 in 2016-17.
The figures also show that the total amount of R&D support claimed rose to £4.3bn, an increase of £1bn when compared with the previous year.
A total of £31.3bn was claimed as qualifying R&D in 2017-18, an increase of 26% 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 300,000 claims have been made, with £26.9bn claimed in tax relief.
Commenting on the figures released, accountancy firm RSM said the figures show that just over 40% of claims are made by companies less than 10 years old, which it added suggests that despite continued efforts by both HMRC and the adviser community, businesses still perceive R&D tax credits to be predominantly for young companies.
James Tetley, partner and national head of R&D at RSM said: “To the relief of claimants and their advisers, new resource has cleared the backlog and HMRC is now better equipped to handle the higher levels of claims that we now see.
“From 1 October 2019, the processing of claims has moved to a larger team in Cardiff which should be better able to cope with the fluctuations in demand. Prompt processing is crucial to help reduce the time lag between R&D spend and receiving the relief. This is particularly important for early stage businesses where cashflow is often an issue.”
He added: “While much is uncertain as we move towards the next deadline in the Brexit saga, enhancing the R&D scheme would be an obvious lever available to the Government to try and boost the UK economy post Brexit, particularly if State Aid constraints no longer applied.”