The manufacturing industry made the second highest number of research and development (R&D) tax credits claims for the year 20/21, according to HMRC’s R&D tax credit statistics, analysed by tax relief specialist Access2Funding, a Ryan company.
A total of 18,795 claims were submitted, representing a 3% increase from the previous year, and totalling £1.5 billion. This is a number that will continue to grow as the 20/21 claims window remains open for claims until March 2023.
Manufacturing businesses accounted for 21% of the total number of UK claims, with the average manufacturing R&D claim worth £80,000, compared to £89,000 in 19/20. For SMEs, the average claim dropped from £52,000 to £50,000.
With regards to other sectors in the report, taking top spot with number of claims was the Information and Communications sector, at 22%, closely followed by Professional, Scientific and Technical at 19%.
A total of 89,300 claims throughout all industries were made overall up until 31 March 2021, with 78,825 claims from SMEs.
Nigel Holmes, Director of Tax at Ryan, said: “It’s refreshing to see how the manufacturing industry was able to maintain momentum during the Covid-19 pandemic, with more claims made, however it is not surprising to see a reduction in the total value of claims and a 15% decrease in R&D expenditure as businesses were unable to carry out normal levels of R&D activity.
“Manufacturing SMEs have particularly weathered the storm, with 3% more SMEs claiming in 20/21 than 19/20 – reflecting the resilience of the industry and its ability to adapt and overcome.
“As with the UK’s current financial pressures, R&D tax relief can help offset other rising costs and help stabilise future business growth, and manufacturers have shown they are in a great position to continue to go up against anything that is thrown at them and ensure that R&D is at the heart of a successful economy.”
The average claim value across the UK is sitting at approximately £74,000, or £54,000 for SMEs. There has been a 7% increase in the provisional estimated amount of claims made compared to last year, from 85,900 to 89,300, driven by a 7% rise in the number of R&D claims made by SMEs.
Tax relief specialist Access2Funding is supports businesses across the UK with accessing innovation tax relief and in 2021 helped return a total of £17 million to businesses.