Research and Development (R&D) tax credit is a tax relief designed to encourage greater R&D spending. Investment in R&D can increase productivity and so is important for the long-term growth of economies.
From the launch of the scheme in financial year 2000 to 2001 until the end of 2012 to 2013, more than £9.5 billion had been claimed in tax relief and payable credits. Over 28,500 companies had claimed under the Small and Medium-sized enterprise (SME) scheme and more than 7,000 under the large company scheme; altogether making more than 100,000 claims for periods up to and including financial year 2012 to 2013.
This evaluation estimates that for every pound spent on R&D tax credits, between £1.53 and £2.35 is additionally spent on R&D by UK companies. The results are in line with previous international studies, which have found tax credits stimulate from around 0.3 to around 3 times their value in R&D investment.