According to the latest figures from HM Revenue & Customs (HMRC), UK businesses are making fewer claims for research and development (R&D) funding than ever before.
Analysis of the figures suggests that UK firms made eight per cent fewer R&D funding claims in the 2016/17 financial year than the year before, and this was the first year where R&D tax credit claims saw a decline. Over the period, the number of claims dropped by more than 3,000, from 42,870 to 39,465, with the same pattern seen all over the UK.
As a consequence of this, the amount of Corporation Tax relief awarded to small and medium-sized enterprises (SMEs) which claim research and development expenditure credits (RDECs) also fell, with the value claimed by innovating firms decreasing by six per cent.
The research also found that, in 2016/17, businesses claimed £3.41 billion in R&D tax credits, which was £230 million less than in the previous tax year. Of this, 29 per cent was received by businesses based in London, with firms in the capital claiming £1 billion of funding.
In the UK, Northern Ireland claimed the most credits, with 1 R&D tax credits claim made per 51 businesses, and statistics showed that 1 per 55 firms claimed in the North of England, and 1 per 69 firms claimed in the North West.
Commentators attribute the decline in claiming tax credits to the fact that UK businesses are not well informed about the benefits of doing so, which is costing innovative firms – and the economy – billions of pounds every year.
For help and advice regarding business tax reliefs, contact a member of our expert team today.