Now more than ever, it is vital for British business to explore whether they may be able to recoup some money through Research and Development (R&D) tax credits.
With the end of the tax year fast approaching for many businesses and the spread of the coronavirus throwing many into severe financial turmoil, UK businesses could see their cash pot boosted by an average of £90,000 by claiming back money spent on R&D.
R&D tax credits can be claimed across a number of areas including employee costs, any subcontracting costs used in R&D work, software purchased for R&D activities, the physical materials used during a project, and even the utilities such as water and power that help fuel an R&D venture.
However, the latest data for the 2017-18 year shows there are some 5.9 million businesses operating across the UK, but just 47,715 submitted a claim for R&D tax credits. That’s just 0.8% of businesses making the most of the government-backed scheme, despite it having been boosted further in the last UK Budget, with even more money recoupable now.
For those that did benefit, there was a sum of £4.2bn awarded, an average of £89,904 for each company.
The highest percentage of claims in contrast to the number of businesses operating have been in the North East and Northern Ireland, where 1.1% of all businesses claimed for R&D tax credits. At 0.7%, the lowest amount of claims per number of businesses has been in Scotland, Wales and the South West.
When it comes to the highest value of claims, London leads the way with a total of £1.2bn claimed, with the average business benefitting to the tune of £128,165. The East of England and the South East also saw the average claim per business exceed £100,000, hitting £117,709 and £108,871, respectively.
We’re entering into what could potentially be the most challenging economic landscape since the 1930s and we’re already seeing a huge impact to British business in terms of them being able to operate, generate income and pay employees.
For many, there is a very real chance that they won’t bounce back and that’s why now more than ever, it’s vital that where possible, companies are taking advantage of the Government’s R&D cash pot.
The Government has just committed to increasing this pot but as the data shows, it is going largely unutilised despite the average UK company being in line for a £90,000 payout.
With the end of the financial year approaching and a long road ahead of us, we would urge all UK businesses, no matter how large or small, to take a serious look at R&D tax credits. They may well have carried out work that qualifies and the cash they could claim back might make the difference in helping them survive this tough period.
RIFT Research and Development is an R&D tax relief expert in helping business owners in multiple sectors realise the financial credits available through previous monies invested in innovation