Businesses in Manchester could be claiming millions more in research and development (R&D) tax credits as more than eight in 10 companies across the city are eligible, according to tax relief specialists Catax.
A massive 84 per cent of companies in Manchester have developed new products or business processes in the last two years, spending an average of £209,758 on these innovations, research shows1.
This means these companies are in line for valuable R&D tax relief that the government provides to encourage innovation.
But so far only 48 per cent of all Manchester firms report having claimed the tax credits which means at least 43 per cent of eligible firms could start claiming, boosting their revenue by tens of thousands of pounds every year, according to the study.
Manchester business executives believed the average value of an R&D tax relief claim in the first year to be just £19,118 when the true figure is more than double that, at £49,000 for firms in all sectors nationwide. R&D doesn’t have to have been successful to qualify and claims can be backdated at least two years2.
Companies in Manchester have previously missed out on R&D claims either because they don’t think they qualify or they incorrectly believe that it is expensive and time consuming and ‘would not know where to start’.
This is despite 76% of businesses in Manchester being aware that companies can claim R&D tax relief if they develop a new product or service, according to the Censuswide survey.
Across the UK, the number of firms that have ever claimed is 37%, which puts Manchester ahead of the national average.
Mark Tighe, CEO of Manchester-based tax relief specialist Catax, commented:
“There is a great opportunity here for Manchester’s business sector to really cash in on its impressive investment in innovation by ensuring all eligible companies claim what they are due in R&D tax credits.
“With average annual R&D claims sitting in the tens of thousands, this is a major untapped revenue stream for many Manchester companies and could make a huge difference to their bottom lines.
“There is still a misconception among many companies that R&D is all about science laboratories and test tubes and is not related to their own work. We’d like to see this change.
“Companies in Manchester invest hundreds of thousands each year on developing new products and services so business executives looking to improve margins and efficiencies should take a proper look at their R&D tax relief entitlements.
“If all this money were reinvested in the businesses to fuel further growth and innovation, it could really supercharge the whole city’s economy.”