What are R&D Tax Credits?
Introduced in 2000, research and development (R&D) tax incentives, to help incentivise and encourage innovation and invention through British businesses. Each year, HMRC release the key statistics for R&D tax credits, to provide information on the number of companies claiming R&D tax credits and their associated costs.
You can explore the full statistics here, but we’re running through the highlights below!
Highlights of Tax Credits March 19-20
The estimated total number of R&D tax credit claims for the year ending March 2020 is 85,900, an increase of 16% from the previous year. The increase is primarily driven by a 16% rise in the number of SME R&D claims to 76,225 (see figure 1).
The estimated total amount of R&D tax relief support claimed for the year ending March 2020 is £7.4 billion, an increase of 19% from the previous year. This corresponds to £47.5 billion of R&D expenditure, 15% higher than the previous year (see figure 2).
There is a concentration of claims by companies with registered offices in London (20% of total claims and 31% of total amount claimed), and the South East (15% of total claims and 18% of total amount claimed). However, the registered office location may not be where all the R&D activity takes place. No surprises here but the most surprising thing is that the North West is the next highest region outside of London and the SE (see figure 4).
The Information and Communication, Manufacturing, and Professional, Scientific and Technical sectors continued to have the greatest volume of claims, making up 64% of claims and 69% of the total amount claimed for the year ending March 2020 (see figure 5).
If you would like to discuss the content or aren’t sure about whether you are eligible to claim R&D tax credits, please contact one of our experts for a confidential and non-obligated discussion.
What have you got to lose? And who knows, you might be eligible to claim R&D tax credit without realising it.
Figure 1: Number of claims for R&D tax credits by scheme, 2014-15 to 2019-20
Looking at Figure 1, we feel that the “RDEC claims by SME” category will see a sharp increase in the next period due to the Covid-19 assistance programme.
Figure 2: Total support claimed through R&D tax credits by, 2014-15 to 2019-20 (£ million)
Figure 3: R&D expenditure used to claim R&D tax credits by scheme, 2014-15 to 2019-20 (£ million)
Figure 4: Number of R&D tax credit claims by region of company registered address, 2019-20
Figure 5: Number of R&D tax credit claims by industry sector, 2019-20
There is a concentration in the number of claims in the Information and Communication (22%), Manufacturing (22%) and Professional, Scientific and Technical (19%) sectors, accounting for 20%, 25% and 24% of the total amount claimed, respectively. The coding of industry sectors may not always reflect the sector of companies’ R&D activity.
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