Was R&D a Priority for Businesses in the Year of COVID-19?

HMRC has just released statistics that show us how many R&D claims were made in 2020, how much was paid out in R&D support, which industries claimed the most R&D tax relief and whereabouts the pockets of innovation are within the country.

So, in a year that was filled with a global pandemic and Brexit inspired cutbacks, redundancies and closures, was research and development a top priority for these companies? Did they find the time, money and resource to create and deliver innovative projects?

Let’s find out…

The number of R&D tax claims that were made in 2020

There was a 16% increase in the total number of R&D tax credit claims made in 2020, taking the total amount of claims made up to 85,900. With small to medium-sized companies (SMEs) making 76,225 R& tax credit claims, it’s clear that they’re the driving force behind the increase in the number of R&D tax claims made and are still obviously making R&D projects a priority.

To boost the economy and make the UK a strong, global competitor for innovation across all industries, the government is keen for companies to prioritise and invest in innovation. In return, under two separate schemes, one for SMEs and one for large companies, they’re offering SMEs and large companies up to 33% off the costs associated with their innovative projects and initiatives. These R&D incentives, coupled with an increased visibility of both R&D tax credit schemes, mean that the number of first-time SME claimants has risen by 25% and the number of first-time RDEC applicants by 7%.

How much R&D tax support did companies get?

The government paid out £7.4 billion in tax relief last year. This was up by 19% from 2019. And, on top of SMEs making the most claims, they also received the most R&D tax support. They got £4.4 billion in R&D funding compared to larger companies, which only received £3.1 billion.

But these figures can be slightly misleading as larger companies tend to claim for much larger amounts, in comparison to SMEs. This correlates with the HMRC statistics that show that 33% of all claims made were over £2 million and over 72% of claims were under £50,000.

Who claimed for R&D tax relief in 2020?

Making up 65% of all R&D claims made, the three biggest industries for R&D in 2020 were:

• Information and Communication, who made 22% of all claims
• Manufacturing, who also made 22% of all claims
• Professional, Scientific and Technical, who made 19% of all claims

And, perhaps unsurprisingly, 49% of all claims were made by companies based in London and the South East, with the North West following closely behind.

So, these statistics prove that R&D is still a priority for both large and small to medium companies in the UK. And, as the need for innovation to boost the economy grows, the number of R&D tax claimants is expected to keep growing, year on year.

If you’re ready to make an R&D claim but haven’t got the budget to hire an R&D tax credit specialist, like Myriad Associates, why not use Tax Cloud.

Tax Cloud is the UK’s first self-service online tax credit portal. The portal will take you through the entire claims process in several easy-to-follow steps. You’ll also be supported the whole way through by a team of R&D tax experts at Myriad Associates who’ll make sure you’re claiming the maximum amount of tax relief that you’re entitled to.  

To find out more, visit the website, contact the team on 020 7360 4437 or drop them a message here.

Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud