The latest Research and Development Tax Credits Statistics from HM Revenue & Customs has proved a vital resource in highlighting the benefits of R&D for innovative companies.
It is becoming clear that the average R&D claim is growing, which is fantastic for the UK economy and innovation overall. They establish new trends and outline incentives for SME’s and large companies alike.
At Shencoh, we often speak of the need for R&D awareness campaigns, and no wonder, with the benefits it can have on the economy. We are motivated by the benefits and inspired by it to help more innovative businesses get the tax incentives they deserve. Thankfully the stats below reflect the progress in this success because we all equally benefit from the results of innovation.
Read on for an in-depth exploration of the most recent stats, trends and for examples of R&D and how it can make a massive difference to your companies prospects.
The chart below shows total R&D spending in the UK in cash terms and as a share of GDP. We can see a steady increase year on year. Despite financial and political uncertainties, R&D seems a consistent and reliable source of expenditure.
Since the government aims to put innovation at the focus of its strategy, to improve the UK economy and boost its productivity. R&D continues to be a means to achieve this. In this paper by HMRC, it has been reviewed what the impact the R&D initiative has had on UK based business.
In 2016-2017, roughly 3.5 billion has been claimed in R&D tax relief in the U.K. This can go to show that R&D awareness is increasing, which is no surprise due to the wonders it can do for your business. See some examples of what our clients have done to reinvest back into their company.
Graph from the Office for National Statistics
Why We Should Prioritise Business Innovation:
The R&D Tax incentive has been active since the year 2000. Since this time, over 240,000 R&D Tax claims have been allocated, and £21.4 billion awarded to businesses in the form of tax relief.
In the last few years, especially, it has become abundantly clear that the answer to avoiding an economic crisis is to encourage more business innovation. Through initiatives such as R&D Tax, the government is giving back to businesses that are moving forward in their industries.
Following a frightening forecast for 2018, with the slowest growth since 2009, this investment is in place to help ensure economic prosperity for future generations.
As part of his speech to the International Business Festival in Liverpool, Mr Clark outlined £1.3 billion of investment for British universities and businesses to develop the next generation of entrepreneurs, innovators and scientific leaders who will ensure our future economic prosperity. “Previous investment in new talent has funded research into new cancer drugs and developed critical technology which will bring us driverless cars. Today’s announcement will build on this success and boost the pipeline of talent needed to build a Britain fit for the future. The money, part of the single biggest investment in science in 40 years, will help ensure the UK invests 2.4% of GDP in R&D by 2027 and becomes the most innovative economy by 2030.”
How R&D is used to reinvest:
A staggering 3.5 billion was claimed in R&D tax credits by innovative UK businesses in 2016-17, this can go on to stimulate £8.2 billion additional investments in R&D.
Here at Shencoh, we work with thousands of businesses every year, and many of them actively use their R&D tax credit to reinvest back into their business. They are growing their business by hiring new staff and better resources.
In the Evaluation of Research and Development Tax Credit by HMRC, it was explored how R&D tax credits make an impact on UK businesses. It is estimated that for every £1 awarded to innovative companies via the R&D tax initiative, roughly £1.53 and £2.35 is stimulated in R&D expenditure.
This is because businesses usually spend their R&D tax credit benefits they receive on funding their next push in their Research and Development efforts, which can include hiring new, highly skilled staff members, improving and expanding their work premises, or investing in new high tech machinery.
These stats further prove the impact R&D tax credit can have, not just on individual businesses but the UK economy as a whole.
R&D tax credit claims by Sector and Region:
Businesses claiming R&D make by far the majority of expenditure in the graph above, equaling £23.6 billion in 2017. Manufacturing is a significant sector within this, with 21% going to SME’s. However, the Manufacturing industry is below the national average and sits at £47,016 compare with £53,876. Higher education is second with 23% of the total amount.
R&D in the South East of England totalled £6.7 billion in 2017. With £962 per head, the East of England is the highest in R&D expenditure. Also of note is the West Midlands recent surge in claims.
HMRC have released statistics demonstrating the 688% increase in R&D Tax claims from companies based in the West Midlands over the last seven years, expressandstar.com reports.
An article from Gov.uk states: “Previous investment in new talent has funded research into new cancer drugs and developed critical technology which will bring us driverless cars. Today’s announcement will build on this success and boost the pipeline of talent needed to build a Britain fit for the future. The money, part of the single biggest investment in science in 40 years, will help ensure the UK invests 2.4% of GDP in R&D by 2027 and becomes the most innovative economy by 2030.”
Make Sure you Choose the right R&D Professionals:
Businesses often make a claim more than once. At Shencoh, we look after our clients not just through our process of your application but also offering value later on in your successive financial years. We provide and identify value where we can. Businesses are always growing, and we make it our mission to support that.
Our strong technical prowess in house and our efficient and refined claims process ensures that your claim is 100% maximised and protected from risk.
We have seen how the price of carelessness and poorly prepared claims can miss thousands in reward benefits. This is why we go the extra mile to ensure the most essential and best returns on your R&D credit.
Have You Brought Innovation to Your Industry?
The HMRC initiative for Research and Development is another tool that is set in place to continue to nurture and grow our economy. HMRC understand that it is hardworking, innovative businesses that make the world go round.
If you’d like to find out more about eligibility for R&D Tax credits, take our short eligibility quiz, click here.
Click here to find out more about R&D Tax Credits Qualification.
Click here to Book an Obligation-Free Consultation to find out if you’re eligible.