HM Income and Customs (HMRC) have launched their newest Analysis and Growth (R&D) Tax Credit Statistics Report; sharing information for accounting intervals ending in the course of the 2020-2021 tax 12 months. The report, revealed every year, offers invaluable data on the variety of UK corporations benefiting from the aid and the worth of the money advantages secured.
So what do these statistics imply to corporations in Wales? LimestoneGrey has analysed the information to uncover the important thing R&D tax credit score tendencies, assessing to what extent Welsh corporations are utilising this invaluable authorities incentive.
R&D Tax Credit score Statistics: Background
Since its inception in 2000, the variety of R&D tax credit score claims submitted to HMRC has comfortably surpassed 300,000 with corporations efficiently recovering nicely over £40bn in tax aid over this era.
UK companies can declare tax credit for R&D tasks that concerned challenges of a technological or scientific nature that have been tough to beat.
The work doesn’t should have a profitable end result, and the tax credit cowl a wide range of prices, together with workers, supplies and software program, that have been instantly associated to the mission. Corporations can declare a discount of their tax or, in the event that they don’t have any tax legal responsibility, obtain a money cost.
R&D Tax Credit score Statistics: The Key Information For Wales
SMEs are the lifeblood of the Welsh economic system and that is replicated within the statistics. SME aid claims proceed to dominate for Wales, making up virtually 90% of whole claims.
In accordance with new information launched by HM Income and Customs (HMRC), the overall worth of SME aid claims for R&D tax credit in Wales is £105million. This has decreased from the 2019-2020 tax 12 months, a downward pattern that’s mirrored within the variety of SME aid claims submitted.
The common declare worth for an SME stands at £43,478, a decrease declare worth in comparison with £53,663 nationwide common.
What do these statistics imply for the Welsh economic system?
Finance to spice up the Welsh economic system
£105m of tax-free funding being distributed to Welsh SME companies can solely be seen as having a optimistic impression on our economic system. A proportion of this cash will undoubtedly have been used to speed up future analysis and growth mission and develop workforces.
First set of R&D statistics tainted by impression of COVID-19
This newest report is the primary that incorporates information taken from a tax 12 months that was disrupted by COVID. The impression that COVID had on firm analysis and growth is made clear within the discount of the quantity and whole worth of SME claims. The uncertainty of the enterprise panorama pressured many enterprise plans to alter, leading to postponement of analysis and growth tasks. The furlough scheme might have created gaps in information and experience inside the firm for a considerable time frame.
Matthew Jones, founder and managing director at LimestoneGrey, commented,
“Wales has a incredible enterprise eco-system with a mix of conventional manufacturing business via to renewable power and fintech, all of which require R&D exercise not solely be aggressive however to outlive. COVID-19, as suspected, has had a unfavorable impression on the figures for 2020-2021, with corporations needing to adjust to social distancing guidelines and different COVID-19 restrictions, R&D tasks might have wanted to be postponed and even cancelled. The furlough scheme may have impacted the quantity of staffing prices an organization may have included in a declare, decreasing their total declare worth.”
Wales outperformed by different UK areas
Figures present that companies in Wales are being out-performed by these in different elements of the UK in terms of claiming tax again for R&D work. Wales solely accounts for 3% of UK SME claims. Regardless of this, Wales enjoys a excessive common SME declare worth in comparison with some elements of the UK, though it’s decrease than the nationwide common.
Methods to declare R&D tax credit
Matthew Jones commented additional,
“Investing in analysis and growth actions is nice for enterprise and for the economic system and R&D tax credit can reward you for doing so.”
“My recommendation is to talk to a chartered tax advisor specialising in R&D tax credit. They are going to be capable to focus on your current tasks and enable you establish the pockets of R&D, together with the prices related to it. Absolutely optimising your declare is extraordinarily necessary when claiming R&D tax credit. You don’t want to place within the effort and time in making ready a declare, solely to have important cash left on the desk. It’s crucial that your R&D tax credit score advisor identifies each value related along with your qualifying tasks to make sure you obtain the whole profit that you’re entitled. This isn’t as straightforward because it sounds, your advisor must be skilled to identify these hidden prices that might not be apparent.”
