The total number of UK research and development (R&D) tax credit claims for the year ending March 2020 was up 16% from the previous year, and has doubled in the past five years, according to government statistics released September 30.
Much of the growth has been driven by small and medium enterprises (SMEs), which may be eligible to claim corporate income tax deductions or credits under the “SME scheme.” Small and medium enterprises may also claim the R&D expenditure credit (RDEC) available for large companies when such entities do subcontract R&D work for large companies. The R&D expenditure credit equals 13% of qualifying R&D expenditures.
The government estimates that the total amount of relief claimed for the year ending March 2020 equals GBP 7.4 billion (approximately USD 10 billion), which is a 19% increase from the previous year. Almost 60% of the total was claimed through the SME scheme, which was up 25% from the previous year. R&D expenditure credit claims were also up – by 11%. The government notes that the cost of supporting both schemes “has increased substantially in recent years.”
Among industry sectors, the most R&D claims were made in the information and communication sector, which accounted for 22% of claims. However, the manufacturing sector claimed the highest amount, 25% of the total. The scientific and technical sector was also among the top sectors – third highest in number of claims (19%) and second highest in total amount claimed (24%).
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