Statistics released by HMRC on Sept 14th confirmed that 14% more companies had claimed R&D Tax Credits in the year to March 2015, when compared with the previous year, with almost 90% of these claims being made by small to medium-sized companies claiming under the more-generous SME scheme.
R&D Tax Credits have now been available to UK SME’s for the past 16 or so years, and this continues the year-on-year increase in number of claimants that have been reported in recent years (albeit the rate of increase is lower in the year to March 2015 than it was in the previous 3 years).
The average claim under the UK SME scheme also increased by more than 22% in the most recent year, from £48,110 to £58,776; with overall cost of support increasing by 38% to £2,450 million in the year to March 2015.
In fact more than 140,000 R&D Tax Credit claims have been made in the 15 years to March 2015, with a total of £14 billion tax relief being claimed. Almost 40,000 different companies have claimed under the SME scheme, with just over 9,000 more SME’s claiming under the less lucrative Large Company and RDEC schemes.
By claiming this enhanced corporation tax relief, Companies can reduce their tax liability by an amount equal to a percentage of their eligible R&D expenditure – it’s an activity / cost-based claim that all sorts of companies in all sorts of sectors are potentially eligible to claim. Most SME’s claim for a reduction in their corporation tax liability, whereas a significant number of others (loss-making businesses) are able to claim to be paid a payable cash credit instead.
There is no de minimis in terms of the amount of relief that can be claimed, and tax returns can be amended / re-submitted for up to two years after an accounting period end in order to make the claim. Claimants need to provide a breakdown of claimable costs and an explanation of the R&D work undertaken that makes them eligible to claim – to coin a phrase ‘claiming isn’t rocket science’ (at least when you know how) but it’s often preferable to involve an independent specialist to provide Accountants with support in confirming eligibility and then in making claims.
Less than 12 months ago, the government separately estimated that up to 1 million SME’s could potentially claim this obviously very attractive and worthwhile relief; so, despite the continuing increase in number of claimants, still no more than 5% of those SME companies who could claim actually do so (or have done so) – hence the headline!
If you need advice or support, such that your SME clients don’t miss out, please do not hesitate to contact us either by Tel: 01902 244210 or Email: firstname.lastname@example.org and we’ll get one of our specialist advisers to get back in touch with you ASAP.