New government data shows that more and more SMEs are making use of tax relief for R&D, with more than 8,000 claims made by manufacturers in 2016-17.
R&D tax credits are a tax relief designed to boost innovation by allowing businesses to offset R&D investments against corporation tax, or claim a cash payment if they are making a loss.
R&D tax credit claims have soared amongst SMEs in recent years, particularly after a minimum spend requirement of £10,000 was removed in 2012.
According to the latest figures from HMRC, there have been more than 34,000 R&D tax credit claims from SMEs so far for 2016-17. Around a quarter of these claims came from manufacturers, while only London and the South East have a higher number of claims than the North West.
With more claims still expected to come in, the figures already equate to £1.8 billion worth of support. The total amount of support claimed by SMEs in 2014-15 was £1.3 billion, rising to £1.7 billion in 2015-16.
Despite the scheme’s rising popularity, experts believe that many manufacturers are still missing out on the benefits of engaging in R&D.
Scott Henderson, Managing Director of R&D tax advisory Jumpstart, a GC Business Growth Hub partner, said:
“These latest HMRC figures show a strong performance from UK manufacturers in developing innovation and claiming for R&D tax relief, although they are beginning to be overtaken by tech companies and other businesses operating within the information and communication sector.
“While it’s uncertain if this trend will continue, it will raise Brexit-related concerns that we may be seeing a slowing down of investment in manufacturing R&D. Thousands of manufacturers continue to secure tax benefits for investing in innovation and the sector is the best performing over the past five years, securing over 39,000 of the 138,195 claims made in that period.
“However, there is still a job to do to encourage those who are undoubtedly missing out to put forward tax relief claims when they incur R&D-related expenditure.”