The latest figures from HMRC shows that only 0.3% of SMEs claimed R&D Tax Relief in 2016. That’s 17,135 out of the 5.4 million SMEs based in the UK, up from 15,955 the previous year. These firms could be missing out on hundreds of thousands of pounds that they are entitled to claim which they could re-invest in developing their products and services. But why are so few companies claiming?
Although R&D relief has been around since 2000, many companies haven’t of it or don’t understand how it works. A recent survey conducted by Swanson Reed revealed most companies have misconceptions around who is eligible to claim – with more than half believing R&D relief is restricted to specialist research and pharma companies. This is particularly true of the SME sector, where business owners are focused on keeping things running and don’t have time to investigate complicated tax schemes. But, claiming R&D is a lot simpler than you think.
Since its introduction, HMRC has made many changes to R&D scheme to make it more generous and available to more companies. Both SMEs and large companies are now able to claim, and in some cases able to get up to 33% cash back. HMRC has increased the rate of relief for both SMEs and large companies, with an additional 260% deduction available for SMEs and an 11% above the line credit for large companies. The definition of an SME has also been expanded so more companies can claim under this scheme.
While HMRC and the government are working hard to make the R&D scheme more rewarding, more needs to be done to promote the scheme and help companies understand who can claim. If you would like more information on R&D Tax Relief and how to claim, please contact a Swanson Reed R&D Tax Advisor today for a free assessment. We look forward to speaking with you.