Figures released by HM Revenue and Customs (HMRC) show that claims for research and development (R&D) tax relief have risen by 30%, compared to the previous 12 months.
The tax authority say that the 13,010 claims for R&D tax relief it received under the SME scheme in 2012/13 was the highest ever since 2000.
The total amount of R&D support rose by £150m from the previous year to £1.4 billion.
The cost of support for the SME scheme rose by £170m from £430m to £600m, while the large company scheme declined by £20m from £790m to £770m.
Overall the total number of claims, combining both the SME and large companies R&D schemes, increased by 26% to 15,930 compared to 2011/12. Figures showed that SME claims rose by 30% in number, with large company claims rising by 9%. SME sub-contractor claims made under the large company scheme rose by 13%.
The rise in SME R&D claims has been put down to a change in perception among SMEs who are realising that R&D tax relief isn’t just for the manufacturing or tech sectors, and any business that is developing innovative products or processes can apply.
The large increase in the enhanced expenditure for SMEs which came into force on 1 April 2012 has also been credited as playing a large part in the increase in R&D claims.
The changes to the R&D tax credit policy increased the rate of enhanced expenditure for SMEs from 100% to 125% (allowing relief on 225% of their R&D expenditure. The rule limiting payable credits to the amount of an SME’s PAYE/National Insurance liability was also removed.
Removal of the requirement for a minimum expenditure of £10,000 on R&D had also been highlighted as a positive move, with HMRC saying analysis of the data is likely to encourage more SMEs to consider making an R&D tax relief claim.
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