Research and development (R&D) tax relief claims have increased by 18 per cent in the South West, as more businesses unlock vital funding to support future growth in the region. In addition, the value of claims has risen by 50 per cent totalling £120m for the tax year 2014-15*.
Despite the increase in R&D claims, the South West only accounts for 8 per cent of the UK claims, highlighting that many businesses are overlooking the opportunity to gain a cash injection through R&D tax relief as the region 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.
Sharon Omer-Kaye, tax partner at RSM in the South West, said: “Accessing funding remains a key priority for many businesses across the South West, 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 businesses across the South West 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 spans a broad range of activities which mean businesses across all sectors, ranging from manufacturing and life sciences 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 IP 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 businesses based in the South West could be missing out on further savings.”
Pictured above: Sharon Omer-Kaye, tax partner at RSM in the South West