HMRC has just published its annual report covering the usage of the R&D tax credit schemes, which covers claims made up to March 2018, and the scheme is continuing to grow with another increase of over 20% in claims on the previous year.
We’re still digesting the detail in the report, which you can read for yourself here. Something that can make these figures a little confusing is that although the focus is on the 2017/18 tax year, the figures for 2016/17 have also been updated with claims that were made within the 2 year deadline, but after last year’s report was published.
The total number of R&D tax credit claims has risen by 20% to 48,625, of which 42,075 were made by SMEs.
Overall the total amount of relief claimed was a record £4.2bn
The average claim size for SMEs is almost unchanged at £53,714 (compared with £53,875 for 2016/17) – this is a serious scheme that companies cannot afford to ignore!
Top Regions & Sectors
As usual the top regions claiming are London and the South East, between them accounting for 35% of all claims. This is partly exaggerated by the fact that some firms have their registered addresses in London despite doing their R&D elsewhere.
Behind the top sectors come the North West (yay!), East of England and the West Midlands – again pretty much an unchanged picture from previous years.
The top sector (again) for claims is Manufacturing (13,270 claims). Following closely behind are Information & Communications (12,410) and Professional, Scientific & Technical (10,115). This breakdown often surprises people, and shows that the R&D cliché of “white coats and test tubes” is not really true at all!
Other Interesting Facts
The number of first time claims has continued to rise, and the large revision in this figure compared with last year shows that many of these claims are still being made right up to the 2 year deadline – make sure you don’t miss out if you think this could apply to you!
HMRC likes to compare the amount of spending included in R&D tax credit claims to the survey carried out by the BERD survey, which has shown a steady rise in the proportion of money spent on R&D actually being included in R&D tax credit claims. This was originally meant to show how effective the uptake of the scheme was, although this year the figures suggest R&D claims are accounting for 43% more “R&D Expenditure” than reported by the business survey! I’m planning to discuss this a little further in an article next week, but it suggests HMRC needs to take another look at how they assess the effectiveness of the scheme!
If you’d like to discuss further, contact us at firstname.lastname@example.org