HMRC has just released its latest annual Research and Development Tax Credits Statistics and they make encouraging reading, not just for the companies that have benefited directly, but for UK PLC as a whole.
By the end of 2012‐13, more than 28,500 companies had made claims under the SME scheme since its introduction in 2000, and over 7,000 under the Large Company scheme, which launched in 2002, making a grand total of more than £9.5bn in tax relief claimed to date.
What’s even better news is that uptake is on the increase, with 26% more R&D tax relief claims in 2012-13 compared to 2011-12 and a 30% hike in SME claims on the previous year.
R&D and innovation are both key enablers of economic growth, so it’s great to see businesses making the most of the programmes available to support their research and development, as Felicity Burch, Senior Economist at EEF, the manufacturers' organisation, explains: "The continued strong uptake of the R&D tax credit is good news, as it supports companies seeking to bring new products and services to market. The credit is a strong feature of the UK innovation system and its position within the innovation landscape must be maintained."
At Jumpstart, we work tirelessly to promote awareness of the benefits of the UK R&D tax relief scheme. Why? Because they can make a real difference to the finances of dynamic and expanding companies. "Those companies who reap the benefits of successful R&D claims tend to go on to spend more on R&D, thus creating a virtuous circle and bringing substantial benefits to the wider UK economy," says Brian Williamson, MD at Jumpstart.
Of those companies capitalising on the scheme, those in the ‘Manufacturing’, ‘Professional, Scientific and Technical’, and ‘Information and Communication’ sectors accounted for the greatest volume of claims for 2012‐13, according to HMRC’s latest stats. We have to remember though, that R&D tax relief isn’t just confined to technology and manufacturing companies. Far from it! Lots of companies – in a variety of different sectors – are constantly striving to take their products and production methods above and beyond existing technology. This means that they’re doing R&D – sometimes without even realising it – and could be eligible for R&D tax relief, providing the funding for continuing advances.
Take a business like ACS Clothing for instance: “When Jumpstart advised us that even the processes used by bakeries had been eligible for R&D, then we thought about all the process projects we have in ACS. We realised then that R&D is not the preserve of high-end, high-tech, pharmaceutical businesses!” says Andrew Rough, Finance Director, ACS Clothing Ltd.
So why are so many more businesses now claiming R&D tax relief? The Government’s additional incentives to make the scheme even more attractive, especially for SMEs, are clearly paying off, according to Jumpstart’s Brian Williamson: "The number of new clients we are attracting every day would suggest that UK SMEs are becoming much more aware of the game-changing advantages which can be reaped from government schemes.”
But there’s still a long way to go... Of the 4.9 million SMEs in the UK, still only 0.3% have made a claim. The rewards for innovation and efficiency are there for all to see.
“My company has benefited enormously. Whether you’re £1.4m or £1.4bn, the principle is the same. If everyone made use of the services of Jumpstart, then the UK economy... would be so much healthier. I urge all to follow us, and get what is, after all, rightfully theirs.”
Jim McColl OBE, Chief Executive and Chairman, Clyde Blowers Capital
Author - Laeticia Guichard
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