HMRC Reveals East Midlands Hotspots for R&D Tax Relief Claims

Dated: 2 March 2018 Author: Adam Longmore, Tax Director

In a bid to get business more active in Research & Development the government introduced tax credits as a tax relief to promote investment in innovation.

The rates of relief have grown since its introduction and this now forms an important part of the UK tax system.

For the first time HMRC has published data by region and sector which has revealed the East Midlands hotspots for R&D claims. 

In 2015-16 businesses in the East Midlands submitted 1,595 R&D tax relief claims worth £130m which equates to a 24% rise on the previous year.  The 3 counties ranked as follows:

  1. Derbyshire 295 claims
  2. Nottinghamshire 275 claims
  3. Leicestershire 270 claims

Adam Longmore, Tax Director at our East Midlands office said: 

“The East Midlands has a rich and diverse range of industries that are innovative, fast moving and forward thinking. The above statistics prove that local businesses are benefitting from R&D tax credits, however, what really is more significant is the number of companies missing out through a lack of awareness. The East Midlands ranks eighth nationally and accounts for just 6% of all claims.

Raising awareness is a key objective and we are speaking to an increasing number of businesses who aren’t aware that they qualify. Engaging with clients and making the process simple and efficient will make sure the East Midlands continues to increase its share of the relief.” 

How does it work?

Once projects have been identified we focus on quantifying eligible costs. These calculations form the basis of the headline 230% R&D relief available to SME’s.

In cash terms this means that if you spend £100,000 on qualifying expenditure, you will achieve tax relief of £43,700 on that spend. Without R&D that tax relief drops to £19,000. 

The rules apply to new start-up companies and established companies. Start-ups may be committed to R&D but cashflow constraints will normally limit the ability to get to market quickly. In these circumstances, R&D tax credits can make a real difference. We have assisted a number of clients to claim tax repayments, even when corporation tax hasn’t even been paid due to losses being incurred. This may mean the difference between a project’s success or failure.

Need further assistance?

Give us a call if you would like to discuss this further on 0800 298 3899 or complete our enquiry form.

Useful resources

A full copy of the data can be downloaded here.

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