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There are thousands of businesses missing out on the tax relief that can be claimed for research and development (R&D), according to a recent study.


According to an R&D specialist, Laurence Bard, although large numbers of companies are investing in the development of IT systems and other technologies, they are not claiming the related tax relief.

Bard believes this could be because they are unaware that they could claim for tax relief on R&D costs. A report that has been released by HMRC confirms the commitment of the Government to the provision of R&D tax credits, which is a positive move for many companies. Bard also stated that many subcontractors who are conducting research are unaware that they may be eligible to make a claim.

The latest information is held for 2012-13, with the report by HMRC stating that £1.4bn in R&D tax relief was claimed that year. A claim can be made up to two years after the year when the investment was made, so an amount spent on development in the year 2012-13 can still be requested back up to April, 2015.

Claims made by businesses in some sectors are low, according to the data, but some of these bids are among the highest in the country. The sectors include real estate, construction, health, and the arts. The majority of the amounts claimed, two thirds, were by SMEs in the East of England, as well as the South East and London.

According to Bard, companies in the IT sector are missing out, as the development of technology is very often uncertain.

Who can claim for Research and Development tax relief?

R&D tax relief was launched in the year 2000 in the UK, with the amount of relief having been increased substantially over the years by the Government in order to further encourage innovation.

Small to medium-sized companies are those with 500 employees or fewer, a turnover of below £100m and a balance sheet that is less than £86m. Either small or large companies can claim for R&D tax credits, as long as they meet the criteria.

What is it worth?

Expenditure that was incurred on 1st April 2015 or after will be eligible for 230% rate relief, an increase from the previous rate of 225%. For more in-depth information about claiming research and development tax credits, contact us here at The Accountancy Partnership.

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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