HMRC: 12% increase in R&D tax credit claims in 2014-15

21st September 2016

New figures from HM Revenue and Customs (HMRC) show there was a 12 per cent increase in the number of UK claims for research and development (R&D) tax credits in 2014-15.

R&D tax credits reduce a company’s tax bill by an amount equal to a percentage of its allowable R&D spend. At present there are three possible schemes that businesses can use to claim R&D tax relief: the Small or Medium-Sized (SME) scheme; the Large Company Scheme; and Research and Development Expenditure Credits (RDEC).

The latest HMRC figures indicated there were 22,445 R&D tax credit claims for the 2014-15 financial year, directly from SMEs.

HMRC believes the increase in SME claims is “likely to reflect the continuing effect of the removal on April 1, 2012, of the rule limiting payable credits to the amount of a SME’s PAYE/National Insurance liability and increase in the rate of enhanced expenditure for SMEs from 100 per cent to 125 per cent (allowing relief on 225 per cent of their expenditure) in 2012-13 and then 130 per cent in 2013-14”.

The most common method for SMEs to claim R&D tax credits was through a deduction on their corporation tax liability. Some 10,925 claims were made through this avenue in the 2014-15 financial year, compared with the 3,485 claims made for a payable credit, which is claimed by companies that are making a loss and subsequently have no corporation tax liability to offset a deduction.

HMRC confirmed that since R&D tax credit schemes were first launched back in 2000-01, more than 141,000 claims have been made up until 2014-15, totalling almost £14bn in claimed tax relief.

Some 39,360 different businesses made R&D claims under the SME scheme by the end of the 2014-15 financial year, while 9,030 had submitted claims under the Large Company and RDEC schemes.

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