UK firms missing R&D tax saving opportunities
Some firms could be missing out on millions of pounds of potential research and development tax savings annually, according to new data.
Firms in the North West accounted for only 9.9% of total claims and just 5.9% of the total tax benefits they could be eligible for.
That is despite a 27% year on year increase in the total level of research and tax credits being claimed, according to analysis of the latest HMRC figures for 2014-2015 from Jumpstart.
The low figures for claims mean that firms are potentially missing out on available funds, meaning they could also be placing their own finances under unnecessary pressure.
Of 22,445 claims in the UK which totalled £2.45 billion in tax benefits, just 2,200 cover the North West, which resulted in firms in the region claiming only £130 million back.
Of that figure, 1,865 claims related to small and medium sized businesses, showing that some are aware of the tax relief that is available.
London firms and those based in the South East of England made the most claims, with businesses based in the capital responsible for 19.1% of claims, and 32.7% of the total tax relief claimed in the UK.
South East firms meanwhile accounted for 17.9% of claims and 18.5% of the total.
Research and development is prevalent in many sectors and can be a costly process – most of the claims for tax relief came from the manufacturing; professional, scientific and technical; and information and communication sectors.
Jumpstart suggests that although uptake on tax relief schemes is increasing, many firms are yet to reap the benefits.
Failing to claim available tax relief could be placing a financial burden on some small firms, especially as research and development will likely be a key part of any growth plans.
Should these firms note a reversal in their fortunes, they may find themselves unable to recover, especially if they lack capital.
It’s therefore important to know if alternative finance options exist and to be aware of potential assistance in terms of government tax relief.
Corporate advisory services are also available to provide support on how best to help a business realise its potential.
By Phil Smith