Which sectors are the biggest R&D tax relief winners?

Coming to the end of the financial year, we totted up the amount of R&D tax relief refunds or offsets we’ve obtained to date and it amounts to a whopping £2.532million. It is a significant amount, even if we do say so ourselves! And we were so delighted with the results, we thought it was worthy of an article. Not to blow our own trumpets – because this blog is designed to keep taxpayers up to date with ever changing tax legislation – but to illustrate just how accessible the relief is. The biggest problem with R&D tax credits is the prevailing perception that you have to be wearing a white coat to qualify. We hope to change this.

Obtaining corporation tax relief or a cash lump sum from HMRC can make a significant difference to any company; in total, over £9.5 billion in tax relief has been awarded since R&D relief was introduced. Our work with clients looking to claim R&D tax relief is going from strength to strength and we’re delighted so many companies are able to take advantage of this opportunity. For small and medium sized companies, in financial terms, the relief provides a reduction of up to 45p of corporation tax for every £1 spent on qualifying R&D activity. Companies which are not paying corporation tax because they are loss-making can get a 24.75p rebate for every £1 spent, rising to 32.62p for expenditure incurred from 1 April 2014.

On average, the value of claim per company which we have completed is in excess of £72,000. For some clients it’s a lot more, with multiple claims being awarded during a single financial year. This typically means improved cash flow and having more money available to re-invest into other initiatives or employing new staff. In some cases, companies that have qualified have been able to avoid paying any corporation tax for a number of years, which has significantly accelerated their expansion plans.

Demonstrating how flawed the ‘white coat’ perception is, below is a list of the industry sectors where RJP has secured R&D tax credits for clients. There are some surprising findings, with wealth management being one of the biggest beneficiaries to date.

• Digital and web design- £1,112,089
• Wealth management – £572,736
• Medical – £252,722
• Software development – £156,184
• Courier and transport – £125,611
• Leisure and retail – £82,698
• Data and knowledge management – £52,396
• Automotive – £79,116
• Marketing and media – £49,854

R&D tax relief can be claimed for a wide range of costs incurred during a qualifying project, for example, staff costs, subcontracted R&D, materials and software and energy costs. Find out more in our R&D tax credits FAQ.

As a general rule of thumb, if after reading this you are wondering if you might qualify, as yourself two initial questions:

• Are you incurring costs within an unquoted UK company?
• Have you developed or improved products, services or processes in past 2 years?

If the answer to these questions is yes, try our quick 2 minute qualifier test to get a better idea of your eligibility.

If you are successful at this and want to find out more, please get in touch. It usually takes around 8 weeks to secure a claim and we are very happy to prepare a claim for you on a no-win, no-fee basis.

If you are interested in discussing your company’s eligibility for R&D tax credits further, please contact Lesley Stalker by emailing las@rjp.co.uk