HMRC R&D Tax Credits Claim Statistics (2018-19)

HMRC has released its latest provisional statistics for Research and Development (R&D) Tax Credit claims filed by innovative businesses in the year 2018-19.

These latest UK Government statistics cover both the Small and Medium Sized Entities (SME) Research and Development Tax Credit relief and the Research and Development Expenditure Credits (RDEC) which was formerly the Large Company Scheme.

Key R&D Tax Credit Claims Statistics up to 30 June 2020:

• 59,265 R&D tax credit claims filed (inc SME and RDEC)
• 52,160 of the claims were made by SMEs claiming a total of £2.9bn (est) in company tax relief
• £57,228 - average claim value for SMEs
• £5.3bn of total R&D tax relief claimed on £35.3bn of R&D expenditure
• 35% of all claims were filed by companies based in London and the SE of England
• Wales (3%), Scotland (5%) and N Ireland (3%) fared the worst overall totalling just 11% of all claims filed
• 71% of the total amount claimed was by software development companies
• 300,000+ total number of claims made and £33.3bn in tax relief claimed since the introduction of the R&D reliefs back in 2000

Our insights on these latest R&D Tax Relief statistics

The rising number of claims continues to show a positive trend as more companies become aware of this tax relief which is good news overall.

There is little surprise that London and the S East of England continue to dominate the total number of R&D claims. Or that software claims make up the majority of claims - as these findings very much go hand-in-hand based on our experience.

It is, however, interesting to note the disparity in the figures for:

1. The growing number of R&D Tax Relief claims that fall under £10,000 in value - almost a third of all SME claims fall under £10,000. This suggests a burden on HMRC resources for what is a relatively small overall corporation tax relief total (£70m). Surely there is a more efficient way to file and process these small value claims to help ease the burden on claimant companies and HMRC alike.
2. On the flip-side, RDEC claims make up a substantial proportion of overall claim values (43%) for a relatively small number of overall claim numbers (12%). The disparity is even more pronounced when those SMEs that have claimed under the RDEC relief (e.g. those SMEs in receipt of grants) are excluded. In this case, just over 3,000 RDEC claims (5.5%) account for over £2bn of the total tax relief provided (39%).

You can read the full report here and access the accompanying figures here.