HMRC has released its annual National Statistics report on R&D Tax Credits, covering claims for the period up to year ending March 2020.
These latest statistics once again show increases across the board with 85,900 claims for R&D Tax Credits made during the period ending March 2020; an increase of 16% on the previous year. The value of claims rose to £7.4 billion; an increase of 19% compared to the previous year. The main drivers of growth are primarily SMEs as their number of claims has increased by 16% within the SME scheme and 12% within the RDEC scheme.
There also continues to be high volumes of claims made by first time applicants under the SME scheme as the year ending March 2019 saw a 25% increase on the previous year with 17,495 first time SME scheme applicants. The number of first time applicants in the same period for the RDEC scheme was 2,000, an increase of 7% on the previous year. (Partial figures relating to first time applicants for the year ending March 2020 were not included in the report).
Of the total £7.4 billion claimed, £4.4 billion has come from the SME scheme and £3.1 billion from the RDEC scheme. The latter comprises £2.7 billion claimed by large companies and £375 million claimed by SMEs. Although the volume of claims under the SME scheme is much larger than under the RDEC scheme, RDEC claims are generally much larger than those under the SME scheme.
Top Line Statistics
Estimated Figures – year ending March 2020
£47.5 billion – R&D expenditure (15% increase on previous year)
£7.4 billion – Value of R&D Credits claimed (19% increase)
85,900 – Number of R&D Tax Credit claims (16% increase)
SME Scheme Claims
38,050 – claims for a deduction from CT liability
38,175 – claims which include a payable tax credit
76,225 – Total number of SME scheme claims (16% increase)
£4.4 billion – total value of SME scheme claims (25% increase)
RDEC Scheme Claims
4,370 – claims from large companies
5,305 – claims from SMEs that claim under the RDEC scheme as subcontractors
9,675 – Total number of RDEC scheme claims (12% increase)
£3.1 billion – total value of RDEC scheme claims (11% increase)
R&D Expenditure – 67% of R&D expenditure came from companies claiming under the RDEC scheme. Expenditure by SMEs has driven year on year growth with an increase of 22% from SME scheme claimants and 15% from SMEs claiming under RDEC since the previous year. Expenditure by large companies claiming in the RDEC scheme has increased by 11%.
Location – As in previous years, companies with registered offices in London and the South East make up the majority of claimants (London – 20% of total claims and 31% of total amount claimed, South East – 15% of total claims and 18% of total amount claimed). However, these locations may not be where the R&D actually takes place. The proportions of claims and amount claimed by region are similar to those seen in recent years.
Sectors – Once again, the Information and Communication, Manufacturing, and Professional, Scientific and Technical sectors continued to have the greatest volume of claims, making up 64% of claims and 69% of the total amount claimed for the year ending March 2020.
Support – The cost of support for both the SME and RDEC schemes has increased substantially in recent years. The increase in the SME payable credit rate to 14.5% in April 2014 and the rise in the SME enhanced expenditure rate to 130% in April 2015 have contributed to the growing costs of the SME scheme. Support claimed by large companies has also increased as companies moved from the large company scheme to the RDEC scheme which has a higher rate of support. The RDEC rate rose from 11% to 12% for expenditure incurred on or after 1 January 2018.
The complete report can be viewed here: Research and Development Tax Credits Statistics: September 2021
It must be noted that claims for the period ending March 2020 can still be submitted and these statistics have therefore been uplifted to include estimates for those not yet received. The statistics for year ending March 2020 will be revised in next year’s publication to include additional claims received.
Is Your Company Making the Most of the R&D Tax Credit Schemes?
R&D Tax Credits are a valuable source of cash flow and innovation funding and whilst it is positive that there is now widespread awareness of the schemes, there are companies who are still missing out either by not claiming at all, or by under-claiming.
R&D Funding Group takes the complexity out of the claim process, and can work with you to ensure claims are both accurately prepared and maximised. For further information or to arrange a no-obligation informal chat with one of our advisers, please click here to contact us.