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Tue November 12 2019

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UK construction boosts R&D investment

18 Oct There has been a sharp rise in the research & development tax credit claims made by the UK construction sector.

New statistics released by Her Majesty's Revenue & Customs (HMRC) show an almost fourfold increase in the amount construction businesses have claimed for tax relief on innovation-focused investment.

The amounts claimed have gone up from £35m in 2014-15 to £135m for the latest period, which covers 2017-18. The volume of construction industry R&D tax relief claims has doubled from 2% in 2014-15 to 4% of all claims being made. Construction sector claim numbers have increased by 675% since 2012-13, suggesting companies are investing heavily in innovation and process improvements, said ABGI UK. The company is part of the ABGI Group, which ABGI Group secures over £1bn in tax credits and grant funding every year for companies.

The latest HMRC statistics show manufacturing companies continue to top the industry sector table in making R&D tax credit claims. Businesses operating in ‘professional, scientific and technical’, and ‘information and communication’ sectors account respectively for the second and third highest volume of claims. Together these top three categories were responsible for a combined total of 68% of claims and 73% of the total amount claimed in 2017-18.

A total of £4.3bn of tax relief support was claimed by all sectors in this 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, said ABGI.

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“Given the importance of continued innovation within these sectors, it’s not surprising to see manufacturers as well as technology-focused businesses topping the table within the HMRC’s annual R&D tax relief statistics,” said Scott Henderson, CEO of ABGI UK.

“It is however significant to see the huge rise in the number of claims being made by UK construction companies. This suggests that a growing number of businesses within the sector are putting much greater emphasis on investing in innovation and the development of better processes to help enhance competitiveness.”

He added: “With Brexit looming and the UK facing other economic challenges, R&D tax credits will be more important than ever in incentivising key sectors, including construction, to invest in making themselves more innovative. This will only help UK construction become a world leader.”

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.

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