R&D tax relief, to provide government subsidies to those companies that develop innovation products, services or systems, has been with us for 17 years now. The latest HMRC R&D tax relief take-up report, encouragingly, shows that the following recent improvements to the scheme have increased the amount of tax relief claimed by 22% over the past year:
- Removal of the minimum £10k project spend requirement,
- Increase in the notional uplift tax relief percentage from 125% to 130%,
- Increase in the R&D credit refund rate from 11% to 14.5%.
As you would probably expect, the report is packed with much detailed analysis, statistics and pat-on-the-back marketing language. Reading between the lines, however, some valuable insights can be gained:
- As well as arising from the expected manufacturing and ICT sectors, claims are also being accepted, perhaps unexpectedly, from sectors such as agriculture, construction and professional.
- The exponential rise in annual costs to the Exchequer of funding these claims does not yet appear to have resulted in the usual demands for cut-backs. This is particularly odd in these times of austerity.
- Uncharacteristically, HMRC seem genuinely proud of the take-up of these tax claims.
All of this bodes well for those companies considering making future R&D claims. Particularly as UK R&D tax relief is ultimately funded from the EU, and some commentators have concerns that Brexit might be detrimental to this. So, for once, “well done” to HMRC. Or should it be “well done” to the specialist R&D tax boutiques that are using aggressive telesales techniques?
Blog entry by: Jeannette Hume.