Industry sectors that benefit the most and least from R&D tax credits
Since its introduction in 2000, the number of R&D tax credit claims every year have been rising. Aimed at fuelling UK innovation where R&D spend is at 1.7% of GDP, businesses are yet to fully utilise the relief. While the scheme is available for companies of all sizes, SMEs generally stand to benefit the most. As more than 90% of eligible SMEs are still failing to make claims, we looked at HMRC’s statistics to give you a picture of which industries are making use of the government relief.
2018-19 saw a total number of 59,265 R&D tax credit claims, translating to £5.3bn in relief support. Three sectors stand out the most when looking at the volume of claims: Manufacturing, Professional, Scientific and Technical, and Information and Communication – a combined total of 66%. More interestingly, we see an increase of claims in other sectors we may not immediately associate with R&D: Arts, Entertainment & Recreation, Real Estate and Health and Social Work (read our article on the veterinary industry here).
HMRCs report attributes the growth in numbers from previous the years to the greater awareness and increasing generosity of the scheme. Other statistics show that companies between 0-5 years old had the highest number of claims – total of 23% - and a 13% increase on the number of first time SME scheme applicants.
What we’re excited to see is a change in the ratios. While awareness of the scheme is growing, misconceptions regarding eligibility have yet to be tackled, especially among SMEs.
“The relief is not just for ‘white coat’ scientific research but also for ‘brown coat’ development work in design and engineering that involves overcoming difficult technological problems.” - HMRC
This encompasses money spent towards developing new products, services or processes or the enhancements thereof.
Read more about R&D tax credit statistics here.