Research and development (R&D) tax credit claims by small businesses climbed to £1.345 billion in 2015/16, according to HMRC.
The revenue recently released R&D data for the previous financial year that shows claims increased from £1 billion in 2014/15 to hit another record high last year.
The total number of claims for R&D credits in 2015/16 also rose to 26,225, with SMEs accounting for 21,865 of that figure – up 22% on 2014/15.
R&D tax relief enables businesses carrying out qualifying R&D in their sector to claim an extra corporation tax deduction for certain qualifying expenditure.
This was the most common way for SMEs to claim R&D tax credits in 2015/16, with 12,700 claims made by small firms attempting to reduce their corporation tax liability.
The level of relief available depends on which scheme a business uses.
The relief a small business can get increased to 230% on their qualifying R&D costs under the SME scheme in April 2015.
Larger companies can take advantage of the Research and Development Expenditure Credit (RDEC) scheme, which offers a taxable credit at 11% of qualifying R&D expenditure (rising to 12% from 1 January 2018).
Since the requirement for a minimum R&D expenditure of £10,000 was removed, more businesses meet the criteria to apply for the relief.
Mel Stride, financial secretary to the Treasury, said:
“From manufacturers to scientists, Britain’s brilliant entrepreneurs are leading the way in technology and innovation.
“We will continue to support these businesses so they can promote growth across the country and compete in the global economy.”
Our team of experts can advise on R&D. Speak to a member of our team today by calling us on 0161 832 4451 or via email on firstname.lastname@example.org.