HMRC reports vibrant R&D results

    The latest annual figures published by HMRC reflect the enduring and growing popularity of Research and Development (R&D) tax credits, with increases across the board in both the number and value of claims made. 

    In 2015/16 the total number of claims for tax credits rose to 26,255, an increase of 19% on the year before. The total amount of R&D support claimed soared to almost £2.9bn in 2015/16, itself an increase of 20%, or £470m in cash terms, on the previous year.

    Between 2000/01, when the R&D tax credit schemes were launched, and 2015/16, over 170,000 claims have been made and £16.5bn in tax relief claimed.

    Abbey Tax makes over 600 R&D claims each year on behalf of clients and has already saved them over £22m so far this year, as firms invest in innovation and new digital ways of working. Pertinently, the largest number of claims HMRC recorded came from companies between five and ten years old, with 22% of the total. A further 17% of claims were made by companies up to five years old.

    The removal of the requirement for a minimum R&D expenditure of £10,000 has meant that more companies are eligible to apply for the relief which, allied to the increase in the SME enhanced expenditure rate from 125% to 130% in 2015/16, are clearly two factors helping to drive claims. 

    The total amount of relief claimed by large companies has also gone up, as companies have moved from the large company scheme to the Research and Development Expenditure Credit (RDEC) scheme which has a higher level of support. RDEC help to large companies rose by 17% from 2014/15 to 2015/16, reflecting the higher number of claims and increase in the RDEC rate from 10% to 11%.

    HMRC’s research also highlights R&D claims are concentrated in companies with a registered office in London, the South East or the East of England, although there is a caveat. The regional split is based on the registered head office location so may not be where all of the R&D activity takes place.

    As you might expect, over 70% of claims are made by three industry sectors in particular, namely:
    • Manufacturing;
    • Professional, Scientific and Technical; and
    • Information and Communication.

    Following release of the figures our R&D Director, John Moxon, commented: ‘The figures confirm what we are seeing working with our accountancy clients. Increased awareness is leading to bigger claims. With our nationwide coverage, we are ideally placed to assist clients with technical support and the actual calculation of claims across industry sectors.

    Despite the rise in claimant companies, there are still many thousands of companies who are not claiming this extremely generous relief, despite being eligible to do so.

    Our highly skilled specialists deal with R&D claims every day, with this regular hands on knowledge reassuring our clients as we work together. Our success rate is unrivalled. For a discussion on how to claim R&D tax relief for your clients, contact John Moxon, Director of R&D Tax Services on 0114 236 4457.