R&D tax relief figures show Scottish business with lowest increase in claims

New statistics released today show an increase of 375 per cent in the amount of research and development tax relief savings being claimed by Scottish companies over the last seven years, the lowest level of growth across the UK.

Today’s figures also show businesses in Scotland accounted for 5 per cent of the total value of claims made across the UK in the year 2016-2017, according to Edinbrugh-based R&D tax relief specialist Jumpstart.

Partial figures released by HMRC show 39,960 successful R&D tax claims for 2016-17, with over 34,000 of these secured within the SME scheme. To date, £3.5bn of R&D tax relief support was claimed in this latest period against £24.9bn of innovation-related expenditure.

Today’s figures also show 1,900 claims secured in Scotland so far for the latest 2016-17 period with 1,425 being made by SMEs, accounting for around £75m in tax rebates with the remainder claimed under schemes for large companies.

Also released today were figures Patent Box claims, another tax relief available to help firms develop intellectual property (IP) assets. Scottish businesses accounted for just 3.6% of the value of all Patent Box claims which amounted to a £942.5m in tax breaks for companies across the UK.

Today’s HMRC figures also show a strong focus within Manufacturing where 25% of all R&D tax relief claims were made, securing 29% of the total claimed. Companies listed under the Information & Communication’ sector made 26% of claims (20% of total amount claimed), while those in the ‘Professional, Scientific & Technical’ accounted for 19% of both the number of claim and 24% the amount of overall relief secured across the UK.

Commenting on the new figures, Martin Gartley, Jumpstart’s Scottish Business Development said: “It’s disappointing to see that, despite a strong culture of innovation, Scotland has seen the lowest increase in both number (285 per cent) and amount (375 per cent) in SME claims for R&D tax relief in the period 2010 to 2017. While Scottish businesses started strongly in making claims in the earlier years of the scheme, other regions are catching up. We need to encourage more Scottish businesses which invest in innovation to ensure they seize the opportunity to make a claim for tax relief.”

“With HMRC increasing its scrutiny over R&D tax relief claims, however, it is vital for businesses to ensure they have the right expertise and support to ensure their technical project activities and expenditures are being accurately interpreted against government legislation.”

Introduced in 2000, R&D tax credits are designed to drive competitiveness in British business by incentivising companies to invest in innovation.

Today’s stats show that 240,000 claims have been made since that time with £21.4bn in tax relief claimed.

Since its inception, Jumpstart has helped its clients recover over £100m in R&D tax relief and has identified over £500m in eligible R&D expenditure.