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Demand Increasing For UK R And D Tax Breaks

by Jason Gorringe, Tax-News.com, London

14 September 2017


Uptake of the UK's research and development tax credit rose by almost a fifth during 2015-16, according to HM Revenue and Customs figures.

The latest data shows that companies submitted 26,255 claims for research and development tax credits in 2015-16, up from 22,445 in 2014-15.

The total amount of R&D support claimed rose to GBP2.9bn (USD3.87bn), an increase of GBP470m from the previous year,,and the total value of R&D expenditure against which claims were made was GBP22.9bn in 2015-16, an increase of four percent from the previous year.

First introduced in 2000, R&D tax credits are designed as 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 launch, over 170,000 claims have been made, with almost GBP16.5bn claimed in tax relief.

Over time, the rate of relief has become more generous and is now worth up to 230 percent for SMEs.

Commenting on the figures, Colin Smyth, Tax Partner at RSM, said: "The increase in the number of claims and the level of support given to 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."

TAGS: tax | corporation tax | United Kingdom | tax credits | research and development

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