R&D tax relief claims have increased by 14 per cent in the North East, as more businesses unlock vital funding to support future growth in the region. In addition, the value of claims has risen by 29 per cent totalling £45m for the tax year 2014-15*.
Despite the increase in research and development (R&D) claims, the North East only accounts for 3 per cent of the UK claims, highlighting that many businesses are overlooking the opportunity to gain a cash injection through R&D tax relief and could be missing out on R&D tax savings.
The relief is worth 46p (SMEs) and 29p (large companies) for every £1 of qualifying expenditure and loss making companies can also realise a cash repayment.
Stuart McKinnon, tax partner at RSM in Newcastle, said: ‘Accessing funding remains a key priority for many businesses across the North East, which shows in the uplift of claims across the region. However, due to the level of economic output and innovation in the region, we would expect to see much higher volumes of claims, but the relatively low statistics highlight that many North East businesses could be missing out.
‘This reflects our experience as many businesses are unaware they qualify for tax relief and some perceive the process as onerous so are reluctant to make a claim. The criteria span a broad range of activities which mean businesses across all sectors, ranging from manufacturing through to professional services and technology, could benefit from tax relief.
‘Any business that has developed a new or significantly improved product, process or system via new methods or techniques could be eligible to claim. The Government has recently made more money available for research and development, with an additional £2bn per year commitment for the life of this parliament, which increases the opportunity for even more businesses to access funding through innovation.
‘In addition, any qualifying intellectual property developed in the UK could qualify for a reduced rate of corporation tax at 10 per cent as part of The Patent Box regime, which means North East businesses could be missing out on further savings.’