HMRC’s annual report on R&D Tax Credit Statistics has today been published, providing information on the number of companies claiming R&D Tax Credits. The report is compiled using statistics from claims reported on the Corporation Tax return form CT600. The figures are for 2000-01 to 2017-18 and are based on returns received on or before 30 June 2019.
Since the introduction of the R&D Tax Credit schemes in 2000-01, over 300,000 claims have been made and £26.9bn in tax relief claimed.
2017-18 so far
To date there have been 48,635 R&D Tax Credit claims for 2017-18, with 42,075 being in the SME scheme. £4.3bn of R&D tax relief support has so far been claimed, corresponding to £31.3bn of R&D expenditure. The largest number of claims came from companies between 5-10 years old (24%).
Year on Year Increases
In 2016-17 the total number of claims for R&D tax credits rose to 52,335, an increase of 20% from 2015-16.
The number of claims continues to increase year on year, primarily driven by SMEs.
The year on year increase was primarily driven by a rise in the number of SME claims, which totalled 45,045 in 2016-17, an increase of 22% from 2015-16. The number of first-time applicants in the SME scheme has also increased from 10,540 in 2015- 16 to 12,120 in 2016-17, a 15% increase.
The increase in the number of SME claims in recent years is likely to reflect the effect of changes made to the SME scheme from April 2012 onwards. The removal of the requirement for a minimum R&D expenditure of £10,000 has meant that more companies are eligible to apply for the relief. In the same year the PAYE cap was removed, opening up the scheme to more users. There have also been increases in the SME enhanced expenditure rate, including a rise from 125% to 130% in 2015-16. These changes, together with an increase in the SME payable tax credit rate from 11% in 2012-13 to 14.5% in 2014-15, have made the scheme more attractive.
Large Company Claims
In 2016-17 the total number of claims for the Large Company and RDEC schemes increased by 12% to 7,285. The number of RDEC claims rose as companies continued to switch over from the Large Company scheme. RDEC replaced the Large Company scheme with effect from 1 April 2016. Due to the very small number of claims still received, large company claims from 2016-17 onwards are included in RDEC totals.
The introduction of the RDEC scheme in 2013-14 resulted in an increase in first time applicants from large companies. Since then growth has levelled off with 1,750 new applicants in 2016-17, which is similar to the number in 2015-16.
SMEs working for large companies as sub-contractors or receiving related subsidies are not able to claim under the SME scheme but may be able to claim under the Large Company or RDEC scheme. The number of these claims has risen substantially in recent years.
Location of Claimants
As in previous years, R&D claims are concentrated in companies with a registered office in London, the South East or the East of England (46% of all claims and 61% of the total amount claimed for 2017-18). However, as the regional split is based on the registered head office location it does not necessarily reflect where the R&D activity actually took place. It does however suggest that there may be companies in other areas of the country who are still missing out.
The ‘Manufacturing’, ‘Professional, Scientific and Technical’, and ‘Information and Communication’ sectors continued to have the greatest volume of claims, making up a total of 68% of claims and 73% of the total amount claimed for 2017-18.
25% of claims came from the Manufacturing sector, 24% from Information and Communication, and 20% from Professional, Scientific and Technical.
Make sure your company doesn’t miss out
Whether your company is already claiming R&D Tax Credits or if you’ve never claimed before, it’s always worth checking to ensure you’re not missing out. Many companies continue to underclaim and many more don’t believe they are eligible to claim when in fact they are. Contact R&D Funding Group for a free, no obligation consultation. Call Stephen Dyson on 0161 464 6351, email email@example.com, or complete our contact form.
Source: Research and Development Tax Credit Statistics October 2019, HM Revenue & Customs
The full report can be viewed here.
Please note that each year the figures reported for previous years are subject to change as companies are allowed to claim up to 12 months after the filing deadline. The figures are therefore adjusted accordingly to include additional returns that have been received. As figures are not yet complete for 2017-18, any comparisons made between previous years are made between 2016-17 and 2015-16.