R&D tax credits are a government initiative to support innovation in UK business. Since it started, HMRC produce annual figures showing how much in R&D tax relief is paid and breaking this down by industry sector, region and other monitoring factors. For the year 2016-17, Wales received £70m in R&D tax credits, compared to only £5m in the previous tax year. This is amazing news for innovative Welsh businesses that are committed to research and development in their field.

How much money do individual businesses actually get?

In Wales, the average R&D tax credit claim for an SME is £46,296. This is a substantial amount to invest in your next project. £50m of Wales’s £70m total went to SMEs.  But it is below the UK average amount of £53,876. For large companies using the RDEC scheme, the average claim is worth £250,000 in Wales and £272,881 in the rest of the UK. The discrepancy in the numbers here are something that Welsh businesses can rectify in the future.

Why do Welsh businesses get less of the R&D tax credit pot?

There are a couple of reasons why businesses aren’t applying for the R&D tax credits they are entitled to. Wales are moving in the right direction, with a 50% rise in claims to 1,245 in the last tax year.

But lots of businesses rule themselves out of R&D tax relief without even looking at the regulations because they believe it is only for companies involved with technology or science. Your project must be looking for a “technological or scientific advance”, but this is happening in every industry sector.

Unfortunately it is still the case that many businesses simply don’t know that R&D tax credits exist.

Other companies are put off completing the application because it is quite tricky, even some accountants don’t want to get involved. It is a niche area of tax law, but you don’t have to do it alone, there are specialists like us that can help you.

Another issue is one of maximising your claim. Again, some companies that do make successful applications are not claiming for all the qualifying costs and eligible projects they are entitled to. They are missing out on part of their claim because they don’t have the necessary experience or know-how to write a fully optimised claim. Give us a call today and let’s get started on your R&D tax credit claim.


Jamie Smith