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R&D tax credits: small business takes a larger slice

Date: 2nd November 2015

The latest figures for R&D tax credit claims are out and the number of claims rose in 2013-14 compared with the previous year, with 20,100 claims made in total. This represents £1.75 billion of support and £14.3 billion of R&D expenditure.

  • The total R&D expenditure on which claims were made increased by 7% in 2013-14.
  • The number of claims from Small and Medium Enterprises (SMEs) rose in 2013-14 by 23% over the previous year.

SMEs account for the increase in claims.

The increase in support in 2013-14 was mostly driven by a higher number of SME claims, with the total value of SME claims rising to an all-time high of £800m in corporation tax reductions and tax credit payments.

One reason is thought to be the removal on 1st April 2012 of the rule limiting payable R&D tax credits to the amount of an SME’s total payroll/PAYE tax liability, as well as increases in the rate of the R&D enhancement for SMEs claims, which went up from 100% to 125% on 1st April 2012. On the same date the requirement for a minimum R&D claim threshold of R&D expenditure of at least £10,000 was abolished.

Where are claimants based?

The highest concentration of claims came from companies with offices registered in London, the South East and the East of England. In total 64% of the total amount claimed was from these locations. This may not be completely representative since companies do not always carry out R&D where their office is registered.

Which sectors claimed?

The volumes of claims were highest for the ‘Manufacturing’, ‘Professional, Scientific and Technical’, and ‘Information and Communication’ sectors, which between them made 76% of claims and secured 81% of the total amount claimed in 2013-14. ‘Manufacturing’ made the most claims (31%) and secured 37% of the total. Caution needs to be taken with these figures as claims are not always perfectly categorised.

Read the full HMRC report here...

Linda Eziquiel

Director, Randdtax.

 

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