Manufacturing companies falling behind in R&D tax relief claims
New statistics released this week show manufacturing companies are falling behind their counterparts in the Information and Communication sector in making R&D tax relief claims.
Partial figures released by HMRC show ICT firms made 10,240 claims in 2016-17, compared to 10,115 made by manufacturers, marking the first time industry has not led the way in applying for tax relief on innovation-related expenditure.
In total 39,960 successful R&D tax claims were made in all sectors across the UK in 2016-17, with over 34,000 of these secured within the SME scheme. To date, £3.5bn of R&D tax relief support was claimed in this latest period against £24.9bn of innovation-related expenditure.
Also released are figures for Patent Box, another tax relief available to help firms develop intellectual property (IP) assets, with UK manufacturing topping the table with 560 companies securing £350m in tax relief.
Jumpstart’s Managing Director Scott Henderson commented on the figures:
“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 & 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.”
He went on to add: “With HMRC increasing its scrutiny over claims, it is also vital for businesses to ensure they have the right expertise and support available to ensure their technical project activities and expenditures are being accurately interpreted against government legislation.”
Introduced in 2000, R&D tax credits are designed to drive competitiveness in British business by incentivising companies to invest in innovation. This week’s stats show that 240,000 claims have been made since that time with £21.4bn in tax relief claimed.
Since its inception, Jumpstart has helped its clients recover over £100m in R&D tax relief and has identified over £500m in eligible R&D expenditure.