The Top 5 Sectors for Claiming R & D Tax Credits | Innovation Plus

The Top 5 Sectors for Claiming R & D Tax Credits

Posted on 3rd March, 2017 |

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Although awareness of the R & D tax credit scheme has grown in recent years, there are still many companies who mistakenly believe that their company or sector does not qualify to make an R & D claim. In reality the government’s definition of a qualifying R & D activity is actually quite broad.

With the average annual claim being worth £54,214 to SME’s alone, our team has put together a quick ‘cheat sheet’ of 5 industries that are rich in opportunity for claiming R & D tax credits.

In a nutshell, what qualifies for R&D Tax Relief? Although there are hundreds of pages of legislation, it often boils down to the following:  People solving difficult technical problems.

These are found across every sector of industry. If your company operates in one of these industries and you are not claiming, please contact one of our consultants .

1. Admin and Support Services

  • Total number of R & D claims in 2014-2015: 1,115
  • Total amount claimed in 2014-2015: £80 million
  • Sector examples:
    • Rental and leasing firms (for vehicles or machinery)
    • HR companies
    • Recruitment firms
    • Call-centre firms
    • Tour operators
    • For a full list of companies in this sector see Section N of

R & D tip: The popularity of cloud technologies is compelling many companies in this sector to offer their services online through a SaaS model. The development of these platforms, where there are technical challenges in achieving performance, scalability or integration often qualifies as R & D expenditure.


2. Wholesale and Retail trade, repairs

  • Total number of R & D claims in 2014-2015: 1,975
  • Total amount claimed in 2014-2015: £100 million
  • Sector examples:
    • Vehicle sales and repairs
    • Agencies in the sale of agricultural materials, chemicals, food, household goods and others
    • Wholesalers of food, electric goods, clothing, cosmetics and others
    • Retailers of food, electric goods, software, books and others
    • For a full list of companies in this sector see Section G of this document.

R & D tip: Qualifying expenditure for R & D tax relief is not limited to client-facing projects. Many retailers and wholesalers invest in developing solutions that streamline or automate their business operations (for example, software that helps a company manage its stock levels and delivery schedule more effectively).


3. Information and communication

  • Total number of R & D claims in 2014-2015: 5,165
  • Total amount claimed in 2014-2015: £385 million
  • Sector examples:
    • Publishing of books, directories and mailing lists
    • Software publishing
    • Business and domestic software development
    • Video, sound and movie production
    • Wired, wireless and satellite telecoms services
    • Fund management firms
    • Insurance firms
    • A full list of companies in this sector is found in Section J of this document.

R & D tip: Software development firms are typically strong candidates for claiming R & D tax relief. Even if a company develops software with similar functionality to one that already exists in the market, the technical challenges faced may be different and thus the resources invested in developing its unique methodology and architecture will still qualify as R & D expenditure.


4. Professional, Scientific and Technical

  • Total number of R & D claims in 2014-2015: 4,065
  • Amount claimed in 2014-2015: £525 million
  • Sector examples:
    • Engineering and architectural firms
    • Biotechnology firms
    • Advertising and media agencies
    • Bookkeeping and tax consultancies
    • Public relations and communication firms
    • Security systems and services
    • A full list of companies in this sector is found in Section M of this document.

R & D tip: Claiming R & D tax relief can be particularly valuable to science-based and engineering firms as it helps to offset the expense of testing the application of new technologies and materials. Such activities that are made on behalf of another firm may also qualify.


5. Manufacturing

  • Total number of R & D claims in 2014-2015: 4,990
  • Amount claimed in 2014-2015: £770 million
  • Sector examples:
    • Manufacturers of electrical goods, vehicles and industrial equipment
    • Manufacturers of gasses, chemicals, plastics, rubbers and oils
    • Manufacturers of metal, wood, glass and paper products
    • Food and beverage manufacturers
    • Clothing and footwear manufacturers
    • For a full list of companies in this sector see Section C of this document.

R & D tip: This sector is the single biggest benefactor of the R & D tax credit scheme with companies investing in new product development, industry compliance and improving their production processes. For more information on R & D tax credits in this sector, click here.

ConclusionThe wide variety of company types found in the top 5 sectors for claiming R & D tax credits reinforces the notion that a large portion of companies that could be claiming R & D tax are missing out.

Even if your company is not in the above sectors, you may still qualify to make a claim. Contact one of our consultants for an obligation-free assessment by phone.