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More and more companies are benefitting from lucrative R&D Tax Credits claims, especially in southern regions. Is yours missing out?
Figures show that claims made by companies based in the region totalled 8,970 over the last year, up from 7,440 made previously. Of these, 7,805 were successful (consisting of both SME and RDEC claims). This means that more than £1 billion was secured by companies in the South East in R&D tax relief, second only to London itself.
To put this into context, 59,265 claims for R&D Tax Credits were made across the UK in the 2018-19 period, generating £5.3b of tax relief. The South Eastern region alone accounted for 19% of this. Overall, this incredibly generous tax relief has helped to stimulate over £35 billion of R&D expenditure by businesses across Britain.
Companies based in London specifically also secured £510 million in rebates under the Patent Box scheme during the same period. Essentially the Patent Box allows companies to claim tax relief on profitable patented assets. See our Guide To The UK Patent Box for more information.
Again for context, in 2018-19 £992 million was secured by businesses across the whole of the UK in Patent Box tax breaks.
As would perhaps be expected, the numbers show UK companies in the ‘Professional, Scientific and Technical’, ‘Information and Communication’ and ‘Manufacturing’ sectors bring about the largest volume of claims. The three of these alone accounted for a combined total of 66% of claims and 71% of the total amount claimed in 2018-19.
There’s no doubt that London and the South East is an innovative and progressive place to be. These figures are in many ways no surprise, but with the upheaval of both COVID-19 and Brexit continuing, the truly interesting data will be that in the years to come. However it’s great that so many companies have benefitted from the scheme, with the resulting funding allowing them to better tackle the challenges ahead.
At Myriad Associates we’ve always believed that R&D Tax Credit relief is the key to driving UK innovation forward and remaining competitive on the world stage. Since the year 2000 when the scheme was launched, more than 300,000 claims have been made bringing about £33.3 billion in tax relief. Valuable indeed!
R&D Tax Credits act as an incentive for UK businesses of all sizes to innovate and grow. It’s a highly valuable source of funding for companies that have invested money in developing new products, services and processes, or on upgrading existing ones.
The scheme works by allowing UK companies to claim back a percentage of their R&D expenditure as tax credits. These credits serve to either reduce the company’s Corporation Tax liability, or increase their taxable losses.
Although some sectors are bigger claimers than others, R&D Tax Credits are open to any company as long as it is located in the UK. Essentially, if a company has spent money on research and development that seeks to make an advance in science or technology, then R&D Tax Credits are likely to follow. And with as much as 33 pence claimable for every £1 of R&D expenditure, it’s a serious financial leg-up.
The R&D Tax Credits scheme has run for a long time now and is certainly not a relief to miss out on. But throughout our years in business, the Myriad team has found that far too many business owners previously didn’t know it even existed. Others wrongly believe their company isn’t eligible or that their R&D project just wasn’t ‘ground-breaking’ enough. We’ve even talked to clients whose work - they thought - was simply daily run-of-the-mill stuff, when it fact it easily attracted the relief. Then there’s a final group of people who are simply put off why the (admittedly rather complex) application process, or that don’t have the time or resources to apply properly.
What if the company received government support during the coronavirus pandemic, or other notifiable State Aid?
The UK government has offered a range of supports for businesses during the coronavirus crisis. Whilst these have been essential for the survival of many companies in these incredibly tough times, certain grants can make a difference to R&D Tax Credit claim amounts.
The SME branch of the R&D Tax Credits scheme counts as ‘Notifiable State Aid‘. If an additional grant is also a Notifiable State Aid (as R&D grants are), then the company will need to use the RDEC scheme regardless of its size or turnover. If more than one R&D project is being claimed for, applications can be made under RDEC for projects where state aid was awarded, and under the SME scheme for ones where no such aid applied.
Don’t worry if this is all as clear as mud! When you contact our R&D tax experts we’ll go through the SME and RDEC schemes in detail. We will also work with you to ascertain which one is the best fit for your company based on any previous state funding awarded.
At Myriad Associates we understand that putting together a thorough, successful R&D Tax Credits claim can be a minefield. It’s especially daunting as each claim is unique, and it’s very easy to make mistakes.
We are a leading R&D funding consultancy, and we’re proud to specialise in all areas of research and development funding. Plus with nearly two decades of experience in this niche area of tax under our belt, we know where all the pitfalls lie.
Don’t take the risk in going it alone. Instead, seek advice from our team by using our contact page or by calling 0207 118 6045.