The value of claims for R&D tax relief has gone up by £380 million in the UK and much of the rise comes from the small business sector.
An increasing awareness of the benefits of research and development (R&D) tax relief has driven the dramatic rise in the number of claims, according to Jumpstart.
It said new HMRC figures showed that the amount claimed under the UK Government schemes rose by £380 million in 2013-14 to £1.75 billion, an increase of 27% on the previous year.
The number of smaller companies claiming has risen by 23%, while large company claims rose by 4%.
The figure show that key sectors are taking advantage of the tax relief:
- 27% was claimed by manufacturing businesses;
- 24% was claimed by professional, scientific and technical firms;
- 20% was claimed by information and communication specialists.
The surge follow years of awareness-raising by Government and specialist advisors to demonstrate the beneficial effect of tax reliefs on UK commerce and industry.
In recent years, the Government has also given the scheme a boost at every budget. This year, it announced an increase in R&D tax credits to 230%. This meant that, from 1st April 2015, for each £100 of qualifying costs, the corporation tax paid by SMEs on income could be reduced by an additional £130 on top of the £100 spent.
Brian Williamson, managing director at Jumpstart, said: "Last year we predicted an increase in the amounts claimed to £1.8 billion, and these most recent figures are very close to that projection. There is no doubt that awareness of the Government's existing tax relief programme is increasing."
Williamson said that many businesses are now recognizing that the scheme applies not only to blue-sky research but to changes made to processes and systems which create better ways of operating.