Scottish companies show resurgence in R&D tax savings

Scottish companies have shown a resurgence in the amount of R&D tax relief savings being made compared to their counterparts across the rest of the UK, according to Edinburgh-based R&D tax relief specialist Jumpstart.

With an increase of 74 per cent year on year in the total R&D tax credits claimed in 2015-2016 in Scotland, analysis of the latest HMRC figures for the FYE 2016 shows that Scottish businesses accounted for 5 per cent of total claims and 6 per cent of the total tax benefits claimed.

Ian Donaldson, business development manager for Jumpstart in Scotland, said: “These latest HMRC figures are a fantastic demonstration of just how much companies in Scotland have benefited from the R&D tax relief scheme in terms of tax savings compared to companies across the rest of the UK. Of the 26,255 claims across the UK totalling £2.9 billion in tax benefits, 1,265 claims came from companies in Scotland resulting in £165 million back.”

Of the 1,265 Scottish claims, 945 were claimed under the SME R&D scheme and the remainder were claimed under schemes for large companies.

London and the South East made the highest number of claims in the year. London companies accounted for 19 per cent of all claims and 29 per cent of the total tax relief claimed, and the South East accounted for 17 per cent of claims and 20 per cent of the total claimed.

The figures show a concentration of claims in the ‘Manufacturing’ ; ‘Professional, Scientific & Technical’ ; and ‘Information & Communication’ sectors across the UK.

Mr Donaldson continued: “Whilst uptake of the UK government’s R&D tax relief scheme is increasing across the UK as a whole and is very healthy in Scotland, I still don’t feel our companies are reaping the full benefits of the scheme.

“Also, local companies could be under claiming or over claiming because their technical project activities and expenditures are not being accurately interpreted against government legislation. As well as the introduction of increased scrutiny over claims by HMRC, the process of claiming is very much a technical assessment, so it is important that companies instruct a specialist advisor to handle this for them.

“There is huge scope for a much more focused uptake by companies in Scotland. I would urge firms here to get in touch with Jumpstart or their advisors to find out more about how they can make significant tax savings through R&D tax credits if they are making a profit or get a cash credit if they are loss making.”

Since its inception, Jumpstart has helped its clients recover over £95 million in R&D tax relief and has identified over £482 million in eligible R&D expenditure.