UK R&D tax relief rises to £8.2 billion
British firms secured £8.2 billion in R&D tax relief during the past fiscal year, marking a 5% rise from the £7.8 billion claimed the year before, official data from HM Revenue & Customs shows. The total amount spent on eligible research activities climbed 7% to £51 billion.
The number of claims dropped 17 per cent to an estimated 40,325, with small and medium-sized companies seeing a 19 per cent decline in claims, while large businesses experienced a 4 per cent increase.
The typical claim value jumped by 27%, with only 6% of all submissions representing 69% of the total relief awarded. High-value claims exceeding £2 million grew in both frequency and overall cost.
HMRC linked the drop in applications to a new information requirement introduced in 2023, designed to tighten compliance standards. These numbers follow recent policy shifts that consolidated the old R&D schemes into a single credit system and an enhanced support program for loss-making SMEs, effective April 2024.
Assistance under the previous SME scheme and its newer counterpart declined by 29% to £2.3 billion, while relief through the merged expenditure credit system rose 29% to £5.9 billion. Large corporations claimed £4.6 billion in total relief, outpacing the £3.6 billion taken by smaller firms.
Big businesses increased their qualifying R&D spending by 14% to £30.2 billion, whereas outlays linked to SME claims decreased by 3% to £20.7 billion. Industries like manufacturing, IT/communications, and professional/technical services made up 75% of all claims and 71% of the relief distributed.
Carrie Rutland, a tax specialist at BDO, observed that companies were still prioritizing innovation despite major overhauls to the tax system. However, she cautioned that the administrative workload had become increasingly burdensome, leaving many firms struggling under the weight of compliance demands.
