If you were to hazard a guess about which tax relief has gained the greatest traction over the last couple of years, what would your answer be? Well, you may be as surprised as accountancy professionals were to learn that the answer is research and development tax relief. According to figures released by HM Revenues and Customs, the cost of research and development (R&D) tax relief claims across the UK has risen by £380 million. That’s an increase of 27 per cent year-on-year, with much of the rise coming from the small business sector.
So what lies behind this rather dramatic rise? Well, new figures from HMRC’s latest figures would suggest that it’s an increasing awareness of the benefits of R&D tax relief which has driven the dramatic rise in the number of claims, coupled with an increasing enthusiasm from small businesses to take advantage of the tax breaks offered by the relief.
According to R&D Tax Credit Consultants, ForrestBrown, HMRC’s new data showed that the amount claimed under UK government schemes soared by £380 million in 2013-14 to £1.75 billion – a 27 per cent year-on-year increase. Of that rise, 23 per cent was attributable to small firms claiming R&D tax relief. Larger company claims, by contrast, only rose by 4 per cent over the same period. HMRC’s figures also show that the technology and manufacturing sectors took the greatest advantage of the R&D tax perk they were entitled to, with a nearly 30 per cent increase in total amount claimed year- on-year.
So what does the financial and accountancy sector make of the latest figures, and will the increase be sustained in future years? Well, ForrestBrown Director, Lisa-Marie Smith, Director, told journalists:
“The headline statistics make for great reading, with SME claims up 23 per cent and the overall value of support claimed under all schemes increasing by £380 million.”
“One of the most interesting aspects is what it tells us about underlying research and development activity in the UK, with the total level of qualifying expenditure at £14.3 billion, an increase of 7 per cent over last year. I would expect next year’s statistics to continue to demonstrate the increaseswe’re seeing, and maybe even escalate as the impact of the increase in the value of the payable tax credit takes effect.”
“We think that a lot of companies who are claiming R&D tax credits may still have barely scratched the surface in terms of how much R&D tax relief they may be entitled to, but seeing the increased awareness is really heartening, and we have great hopes for UK research and technology over the coming year,” she added.
If you think you might qualify for research and development tax relief, or would like more information, contact Steven Glicher accountants on 0161 485 8007 or email firstname.lastname@example.org