Gloucestershire-based businesses topped the league for the number of claims for R&D tax credits in 2016-17 at 540 claims, followed by Bristol on 405 and Devon on 345, according to new data published by HMRC has revealed the hotspots for R&D tax relief claims across the South West.
In total, businesses across the South West submitted 3,100 R&D claims in 2016-17, claiming some £180m in tax relief. Compared to the data reported for the previous year published in February 2018, this represents a 52 per cent rise in the number of claims and a 38 per cent rise in the amounts claimed in R&D tax credits.
The largest number of claims across the region came from manufacturing companies (875) which collectively claimed £610m, followed by information and communications firms (770) which claimed £180m, followed by professional, scientific and technical businesses (635) which claimed £30m.
R&D tax credits are a tax relief designed to encourage greater R&D spending, leading in turn to greater investment in innovation. They work by either reducing a company’s liability to corporation tax or providing a cash injection for companies without a tax liability (i.e. loss-making businesses).
Andrew Gordon, a tax partner at RSM in Bristol said: ‘Compared to the data released this time last year, the latest figures show a healthy rise in the numbers of applications for R&D tax credits, and higher payouts for South West-based businesses involved in R&D activity.
‘While this is very encouraging, there are some sectors – construction in particular – where the numbers of claims are negligible, despite the likelihood that many companies are involved in R&D activity.
‘The fact is there could be many more businesses across the South West that are undertaking R&D work but are missing out on the R&D tax credit payments to which they are entitled.’