The R&D Tax Credits Statistics summarise all data collected with regards to every claim made in the last year (covering the financial year 2016-17). Looking at this data not only gives us rich awareness of the growth of cash paid out through the initiative but gives us evidence of potential rewards to those who are yet to get started on a claim.
Although rates are growing year by year, there still lies a stigma around companies that aren’t working in labs doing scientific research that they will not be eligible to claim.
A quote from the statistics document from HMRC reads: ‘R&D Tax Credits are a tax relief designed to encourage greater R&D spending, leading in turn to greater investment in innovation. They work by reducing a company’s tax bill by an amount equal to a percentage of the company’s qualifying R&D expenditure or by the payment of a credit, again linked to the company’s qualifying R&D expenditure. ‘
In simple terms, HMRC is looking to continue to boost the economy by creating incentives around innovating, therefore qualifying really isn’t as complex as one might assume.
So far in 2018 alone there have been 39,960 claims made for 2016-17, 34,060 of which are in the SME R&D Scheme and numbers are expected to continue to grow as claims for 2016-17 can still be made right up to December 2018 (subject to year end) as the initiative allows companies to claim on any R&D activity up to the last 2 financial years. Because of this, HMRC would like to stress to users that data within the statistics could be seen as “incomplete”.
So far in 2018, £3.5bn has been paid out for £24.9bn of R&D expenditure for 2016-17. Over 25bn was spent on R&D expenditure across the UK in 2015-16, as numbers on both expenditure and tax relief have consistently climbed since the introduction of the initiative in 2000. The majority of business owners have been injecting their rewards back into their companies for continued growth which, in turn, continues to boost the economy with the cycle of innovating and earning.
Further quotes from the 2018 Statistics read: ‘In some cases, an SME can first use can first use its R&D tax credit to reduce its tax bill to zero, and then take the rest as a cash payment. In other cases, a SME with no tax bill might choose to take some or none of its R&D tax credit as cash, with the remainder being carried forward. All such cases are referred to as “combination claims”. There have been 9,020 combination claims made so far in 2016-17. ‘
‘For large companies, the number of RDEC claims rose by 22% in 2015-16 as companies continued to switch over from the large company scheme. RDEC has now replaced the large company scheme with effect from 1 April 2016. Due to the very small number of claims still received, large company claims from 2016-17 onward are included in RDEC totals.’
In the last year, the average amount claimed for SMEs alone has jumped from £42,000 to over £53,500.
Industry averages have soared, with the greatest number of claims coming from the Manufacturing, Professional, Scientific & Technical and Information & Communications sectors, showcasing themselves as the most “naturally innovative” industries.
Almost £3.7bn of support was claimed for 2015-16, an increase of 25% from 2014-15. So far almost £3.5bn in support has been claimed for 2016-17, with an increase expected as more returns are received. Of this 2016-17 amount, £1.8bn has been claimed through the SME scheme and £1.6bn by large companies under the RDEC scheme. £170m has been claimed by small and medium-sized companies, including subcontractors, through the RDEC scheme.’
Below we can see the total amount claimed so far by each industry for 2016-17:
Numbers have climbed massively since the launch of the initiative and last year is no exception. In the 2015-16 stats, the Information & Communication sector collectively claimed £550m, with this year’s data leaping up to £850m, there are plenty more similar improvements for the last year of growth, some of which can be seen below:
Ao, in conclusion, although we’re reaching record rates on successful submissions to HMRC, there is still huge potential for continued growth, if more eligible companies come forward.
The theory behind the initiative has proven to work, with rates on R&D expenditure growing alongside the relief distributed by HMRC, which is funding new innovations, improving the efficiency and success of thousands of businesses nationwide.
Finding out if you’re eligible takes no more than 10 minutes on the phone. It costs nothing for an eligibility check and there’s no obligation to go forward with our process. What’s more, if you do choose to go forward, it’s all no-win no-fee, so you’re guaranteed to stay in a cash-positive situation.
To find out more about How to Claim, click here.
Or for your free eligibility check, give us a call on 0161 757 3657, or click here to fill in a contact form.