The number of Midlands businesses embracing R&D tax credits has risen this year, with figures showing a 12 percent increase, however, more can be done to catch up with other UK regions. Local businesses need to take advantage of the government’s R&D incentives or risk being left behind in the ‘innovation race’, according to tax experts at KPMG.
The warning comes as HMRC publishes its latest statistics on claims for R&D incentives by businesses, which are designed to encourage investment in innovation through cash credits or by reducing a company’s tax bill.
Across the UK, there were 22,445 total claims made for R&D incentives, up by 2,345 for the accounting period 2014/2015, with £2.45 billion of government support claimed, an increase on the previous year.
However, in the Midlands the figures show that there were only 3,060 claims for R&D tax relief, during 2014/2015, by businesses in the region, representing just 14% per cent of the national figure.
Total claims in the region were valued at £285 million, compared to £220 million in 2013/2014 when 2,730 claims were made.
Steve Blacker, leader of KPMG’s innovation reliefs and incentives team in the Midlands, said: “R&D incentives are an important tool in fostering innovation within the economy and a flagship policy for the Government. Whilst the figures show the positive news that there are significant and valuable benefits being claimed, businesses in the Midlands are lagging behind in claiming these reliefs and risk missing out on a great opportunity to invest in their own development. This could potentially be down to businesses not spotting the new legislation which allows a cash credit to be claimed for their R&D expenditure.
“The advantage of R&D incentives is that they are designed to benefit all businesses, regardless of industry, and the criteria apply to more activities than many people realise. Quite simply, you don’t have to be wearing a lab coat to qualify. Businesses really need to step up and realise the benefits of these Government incentives or risk being left behind in the race to innovate and compete at home and abroad”.
Across the country, manufacturing continues to lead the way with 6,345 claims during the period, valued at £770 million, followed by the information and communication sector with 5,165 claims (£385 million) and professional, scientific and technical sector with 4,065 claims (£525 million).
Blacker added: “The UK Government is increasingly using reliefs and incentives to promote the UK economy through the likes of the R&D regime, Patent Box regime and Creative Sector Reliefs. For large companies, R&D Expenditure Credit has increased to 11 per cent, while SMEs now benefit from an increased rate of relief, with the ‘Super-deduction’ increasing to 230 per cent. Coupled with the decrease in the company tax rate, there is no better time than the present for businesses to benefit from reliefs to invest and grow”.