Companies UK-wide have illustrated an ongoing commitment to R&D through a surge in the uptake of the R&D tax relief scheme.
Uptake of the government’s R&D tax relief scheme increased by 19% in 2015-2016 when compared to the previous year. The total number of claims rose to 26,255, equating to £2.9billion – an increase of nearly half a billion pounds.
The majority of these claims – 21,865 – were claimed under the SME scheme, with the remainder claimed under the large company schemes.
Winner & Losers
Once again, London and the South East demonstrated their continued commitment to innovation by making the highest number of claims. London companies accounted for 19% of all claims and 29% of the total tax relief claimed, whilst the South East accounted for 17% of claims and 20% of the total claimed.
Wales and Scotland were the big winners when compared to previous years.
Scottish companies have shown a resurgence, with an increase of 74% in the total R&D tax credits claimed.
Although Welsh company claims represent a relatively small part of the UK total,
Wales has seen the greatest increase in uptake of the R&D tax relief scheme – by 86% – equating to £65million.
Further analysis shows a concentration of claims in the:
- Manufacturing (28% of claims and 32% of total claimed);
- Professional, Scientific & Technical (20% of claims and 23% of total claimed);
- and Information & Communication (26% of claims and 20% of total claimed) sectors across the UK.
Help where it’s needed
Scott Henderson, Managing Director at Jumpstart, said: “It’s encouraging to note an overall increase in the uptake of the R&D tax relief scheme across the UK. The level of first time applicants has been on the rise, having doubled in the last five years.
“Interestingly, the SME scheme deductions from Corporation Tax liability show a substantial increase of 17% by volume and 16% by value of claims, which will mostly apply to profit making companies. However, a much more significant increase [of 55% by volume and 45% by value] in the level of payable credits – where companies are more likely to break even or loss making – would indicate that the increased benefit has gone to the ‘hardest to help’ groups.
