London R&D tax relief claims rise as capital's startups thrive
London has once again seen a significant rise in R&D (research and development) tax credit claims, according to statistics released by HMRC.
The latest 2017-18 figures show London companies made a total of 9,675 claims, up from 7,770 made that this time last year.
There were 8,895 successful claims made by SMEs and a further 780 secured by larger companies, amounting to £1.24bn in R&D tax relief secured by businesses within the city.
Overall, London-based companies secured 20% of the 48,635 R&D tax credit claims made across the UK in the 2017-18 period.
A total of £4.3bn of tax relief support was claimed in the period corresponding to £31.3bn of R&D expenditure by British businesses.
The HMRC figures are based on partial data for the year with the total number set to increase further as more returns are received.
Patent Box claims
London companies also lead the way in making Patent Box claims, another tax relief available to help firms develop intellectual property (IP) assets.
Businesses in the capital secured £523m in relief, accounting for 53% of the value of all UK Patent Box claims.
Overall, companies across the UK secured a total of £993m in Patent Box tax breaks in 2017-18.
Information and comms sectors
This year’s R&D tax credit statistics show manufacturing companies along with those in ‘Professional, Scientific and Technical’, and ‘Information and Communication’ sectors continuing to have the greatest volume of claims.
The three categories account for a combined total of 68% of claims and 73% of the total amount claimed in 2017-18.
Commenting on the new figures, Scott Henderson, CEO of ABGI UK, said: “Given the size of the city and its influence on the UK economy, it’s not surprising to see London companies are leading the way on R&D tax relief claims.
“These latest figures highlight how R&D tax credits and the Patent Box scheme are delivering success, driving forward innovation and helping develop world-class companies in the capital.
“While thousands of London businesses are securing tax benefits for investing in innovation, there are undoubtedly many more here, especially in key sectors such as life sciences and technology, which continue to miss out.
Innovation hot spot
“This year’s figures show London, the South East and East of England as the UK’s main innovation hot spots with companies based in these regions accounting for 46% of all R&D tax credit claims and 61% of the total amount of relief claimed.
“This concentration of activity was behind our decision to open a new London office to provide further support to businesses in these regions.
Since the launch of R&D tax credit schemes in 2000, over 300,000 claims have been made and £26.9bn in tax relief claimed.