HMRC's latest statistics around Research and Development Tax Credits have been published, and they make for eye-opening reading. The average value of an SME claim is on the rise, and more SMEs than ever are making successful claims. Recent trends of more claims coming from fewer claimants are being bucked, showing that word is getting out where it needs to. On the other hand, there are still a couple of major blind spots showing up. Construction is lagging way behind, for example, despite being an industry defined by innovation and problem solving. Here's how some of the most important numbers shake out.
Overall, smaller, more agile businesses are still leading the charge. There was a 19% increase in R&D Tax Credits claims made in 2015/16. Taking SMEs alone, though, that rise is an impressive 22%. The total claimed amounts to almost £2.9 billion, which is up by £470 million over the previous tax year.
Looking at the raw numbers, we see that SMEs made a grand total of 21,865 R&D claims during the year, for a total of £1.3 billion. That's close to half the full total claimed going to small and medium-sized businesses. Average SME claims run to about £61,500, so that's a pretty serious shot in the arm.
As for who's getting all this tax relief, the top SME claimants are mainly concentrated in the fields of information/communication and manufacturing. The headline percentages break down like this:
Those top 3 sectors alone amount to a little over 73% of all the claims made, and around 75% of the total amount claimed at £2.1 billion. By comparison, only about 2.5% of claims came from construction SMEs. That's a disappointing figure on the face of it, but it still represents an increase over previous years. In fact, almost every sector measured made more claims in 2015/16, with the single exception of mining/quarrying.
All of this brings the full total relief claimed since the R&D Tax credits scheme started to £16.6 billion, out of over 170,000 claims made. London and the South East continue to put out big numbers, making 36% of all R&D claims and raking in almost 50% of the total claimed (£1.4 billion). At the other end of the scale, Wales and Northern Ireland are painfully shy with their R&D claims, at about 3% each.
As for what all this means in real terms, we're obviously glad to see that the important numbers are all heading in the right direction. That said, there's still a lot of work to be done. Fields like construction make enormous contributions to the UK economy, and right now so much of that effort is going unrewarded. Putting RIFT on your technical team means we can shoulder the entire weight of the R&D tax Credits process for you. We navigate the regulations and crunch the numbers, so you can stay focused on bringing your biggest ideas to life. Talk to RIFT, and let us get you the credit you deserve.
As always, we had an amazing time at the KEiBA award show this year. Kent is a terrific place to build a business, and it's always inspiring to see so many innovative firms making their marks. There's...