R&D tax credit claims rise

Companies across Yorkshire and the Humber submitted £100m-worth of research and development tax credit claims across a financial year, a 16% year-on-year rise.

New statistics from HMRC  show that companies in the region submitted 1,750 claims for research and development tax credits in 2015-16, up from 1,510 in 2014-15. The total amount of R&D support claimed rose to £100m, an increase of £30m from the previous year.

The total value of regional R&D expenditure against which claims were made was £710m in 2015-16.

First introduced in 2000, R&D tax credits are a tax relief to encourage greater R&D spending and innovation. They work by reducing a company’s tax bill by an additional amount depending on the company’s allowable R&D expenditure. Since the launch, over 170,000 claims have been made nationally, with almost £16.5bn claimed in tax relief.

Over time, the rate of relief has become more generous. For for each £100 of qualifying costs, the corporation tax paid by SMEs on income could be reduced by up to an additional £24.70 (applying 19 per cent UK corporation tax rate for FY17).

Richard Wilson, tax director at RSM in Yorkshire, said: “The increase in the number of claims and the level of support given to Yorkshire companies undertaking eligible R&D is impressive. This reflects a continuing growth in the awareness of these important tax reliefs as well as the positive impact of two changes made by the Government to improve the credits available for SMEs and large companies in 2015-2016.

“Claims have continued to increase in every area of the UK and the number of first time applicants has again increased dramatically. Companies who have not yet considered R&D tax credits should review their position now, as they may not be taking advantage of the tax reliefs that they are entitled to and this is potentially putting them at a competitive disadvantage.”