British mining and quarrying firms received £5m in tax credits for research and development (R&D) projects, according to the latest figures from Her Majesty’s Revenue and Customs, as British-headquartered miners look to invest in new technological innovations.
These research and development incentives could be one of few measures helping domestic British mining, which has struggled in terms of both production and profitability in recent years. Government figures show that domestic mining production has fallen from 11.6 million tonnes to 2.6 million tonnes between 2014 and 2018, while the value of the UK’s total domestic industrial production has fallen from £390m to £160m over the same period.
Yet the UK’s gross exports of mineral production has actually increased over the last half-decade, from 0.4 million tonnes to 0.6 million tonnes. While this is a relatively small increase, this improvement, combined with the tax credits available to UK countries, has generated optimism in both the mining and financial sectors.
Indeed, research from tax advisory firm the Momentum Group found that, of the 59,265 claims made for tax breaks by UK companies, just 40 were made by large mining firms. This is the same total as similarly-sized sewage and education companies, suggesting that there remains considerable potential for UK mining to benefit from tax credit laws. Similarly, 52,160 of all claims were made by small- to medium-sized businesses, while companies under ten years old made up 46% of all claimants, highlighting the potential for new, specialised mining companies to grow within the UK tax structure.
“These new figures for the mining & quarrying industry are welcome and reflect increased innovation specifically in areas such as the reduction of firms’ carbon footprint,” said Tom Verner, managing director for the Momentum Group, going on to highlight this potential. “However, the industry still only represents less than 1% of claims across the scheme and we believe there are still a great many innovative mining and quarrying companies missing out on potentially tens of thousands of pounds in R&D tax credits.”
“Between the £38bn spent by the government on ‘bounce back’ loans for businesses affected by the Covid pandemic, and the potential tax relief that can be claimed in R&D, there is so much support for businesses out there but awareness and understanding of the latter remains stubbornly poor,” Verner continued.
The news comes against a backdrop of uncertainty in British business in general, with the Covid-19 pandemic and the continuing fallout of the UK’s Brexit negotiations generating considerable uncertainty across the country. The UK Government has aimed to encourage innovation in its economy despite these pressures, offering generous tax return opportunities for businesses, which have seen UK companies benefit by around £5.3bn, a 23% increase on last year.