Newly released government statistics present a positive picture of the number of innovative companies benefitting from R&D tax reliefs. This is a government scheme which rewards innovative businesses that seek to make an ‘appreciable’ advance in technology or science with up to £25 of tax savings for every £100 spent on doing so. This can be for the development of new or improved products, software development or process improvement.The figures show a continuing increase in the number of innovative companies making successful claims and the value of the corporation tax relief subsequently provided to them.
Since its introduction in 2000, R&D tax relief has slowly increased in terms of uptake – the most recent figures show that £2.9bn was claimed in 2015/2016, up from £2.45bn in 2014/15. However, this amount was claimed by only 26,255 companies and HMRC believe the relief is significantly under-claimed. For SME’s, £100 spent on qualifying R&D costs can generate tax relief of up around £25 – is this something your company can afford to miss out on?.
Whilst most of the claims came from the manufacturing and tech / software sectors, many more claims were made across a range of other industries, from health and social work sectors and mining and quarrying, to water, sewerage and waste, and transport and storage – innovative companies engaging in development activity across a range of industries benefitting from significant tax savings.
HMRC are keen for innovative companies that are eligible to make R&D claims – making those ‘appreciable’ advances to technology or science – do so. And initiatives like Advanced Assurance aim to encourage smaller companies looking to make their first claim.
However, it is the case that still only a limited proportion of the companies that can claim are doing so. There are a variety of reasons for this. In our experience at the Innovation Taxes Group, reasons like ‘What we do isn’t innovative enough’ – even if the company is clearly making an ‘appreciable’ advance in technology or science; ‘the benefit isn’t worth it’ - up to £25 of tax savings for every £100 spent!; or that preparing a claim is too time consuming and difficult.
Particularly with the latter point, Shorts’ Innovation Taxes Group can help though. Through our simple and unburdening approach to preparing R&D claims, we have helped hundreds of companies across a range of industries obtain millions of pounds in tax savings through this relief. We manage the process, work to collate the information, ensure that the claim is as robust as possible (whilst still being maximised) before submitting them to HMRC on the company’s behalf.
If you would like to find out more about how innovative companies can access a share of £2b-plus of tax relief, please do not hesitate to contact us.
