West Midlands businesses claimed £635 million in research and development (R&D) tax credits for the 19/20 financial year, according to HMRC’s latest R&D tax relief report, with the average claim being worth £81,000.
There was a total of 7,885 claims, a number that will continue to grow as 19/20 years remain open for claims until March 2022.
The report shows a 10% increase in the total amount claimed by West Midlands businesses, with a 13% increase in the number of claims, from tax year 18/19 to 19/20. Since 14/15, there has been a 156% increase in the number of claims.
According to the report, the sectors where the highest number of R&D claims across the UK were made are information and communication (22%), manufacturing (22%) and professional, scientific and technical (19%) sectors, accounting for 20%, 25% and 24% of the total amount claimed, respectively.
Leslie Maloney (left), tax specialist at R&D tax specialists Access2Funding, said: “The uplift in the number of R&D tax relief claims in the West Midlands represents an increasing awareness of HMRC’s tax relief scheme and increasing innovation within the region, which is wonderful to see.
“The key takeaways from this year’s R&D tax credit report are the two growth areas in Professional, Scientific and Technical and Information and Communication, both of which saw significant expansion in number of claims made in 2019-20.
“I personally believe this report shows opportunity for real growth for innovative businesses in the West Midlands, particularly in those high growth sectors and a shift towards the new economy.
“The more traditional sectors like manufacturing and construction have been claiming R&D for many years and we expect this to continue, but for professional, scientific and technical and information and communication to be the main drivers of growth in helping the country to recover economically. This will be reflected in 2022’s report.”
The average claim value across the UK is sitting at approximately £57,000. There has however been an increase in the number of claims made from last year, from 74,200 to 85,900 and this figure will certainly increase.
R&D tax credits are an HMRC incentive to encourage UK businesses to continue to grow by innovating. The incentive being a reduction in corporation tax or a cash payment.