Research and Development Tax Credits September 2023
HMRC have released their national statistics for the tax year 2021 to 2022.
Number of Claims
The total number of R&D claims for the tax year 2021 to 2022 is estimated to be around 90,315 which is an increase of roughly 5% from the previous financial year.
The breakdown of claims includes:
- 79,205 SME Claims
- 11,115 RDEC Claims
Amount of Relief Claimed
The total support claimed through both R&D schemes for the tax year 2021 to 2022 is estimated to be £7.6 billion. This is an increase of 11% from last year’s total of £6.8 billion.
The £7.6 billion is comprised of £4.8 billion claimed through the SME scheme and the other £2.8 billion claimed through the RDEC scheme.
The volume of claims under the SME framework is much larger than under the RDEC scheme, the average claim size is generally much larger for RDEC than SME. The total support claimed through the SME scheme has increased by 14% compared with the previous year. The total support claimed through the RDEC scheme has increased by 7% since the previous year. The average claim value increased by 6% overall when compared to the previous year.
HMRC have claimed that the increase in support may in part be due to the Covid-19 pandemic, which may have prevented some R&D activity taking place. There was no growth in R&D relief claimed in the 2020 to 2021 tax year, which has been out of step year on year.
R&D Expenditure
The amount of qualifying R&D expenditure used to claim R&D tax relief is estimated to be £44.1 billion for the tax year 2021 to 2022, an increase of 8% from the previous year. Most of this expenditure was by companies claiming under the RDEC scheme.
Regional Analysis
HMRC have released stats on regional distribution across the UK. It shows the concentration of claims by companies with registered offices in key locations. London makes up the highest majority with 22% of total UK claims for the year and 32% of total amount claimed. Northern Ireland, Scotland and Wales make up some of the smallest claim volumes across the UK. Most claims outside London come from South East, East of England, West Midlands and the North West.
Industry Sector Analysis
A breakdown of claims made per industry shows 3 major sectors dominate the R&D claims, these are Information & Communication (23%), Manufacturing (23%) and Professional, Scientific and Technical (16%). These sectors account for 23%, 23% and 21% of total amount claimed. This is very similar to the previous year.
The rest of the claims are made up from companies in the Construction, Agriculture and Transport services along with many others across the breadth of the UK.
Momentum Group - Specialist R&D Tax Credit Consultants
R&D tax credits are a UK government initiative to reward business innovation and promote growth through generous tax incentives. A successful R&D claim could generate a significant financial benefit. This will leave you with more to invest in taking your business to the next level.
At Momentum, we know the R&D claims process inside out. We’re the trusted experts in identifying which of your projects and associated expenditure qualify for R&D tax relief.
Although the recent statistics show an increase, we would expect this to decrease over the next year or so mainly due to HMRC's approach to R&D. Many accountancy firms and individual organisations are turning to specialist R&D tax credit consultants like Momentum Group, that specialise in this area to prepare R&D Tax Credit claims as the guidance and legislation need a deep understanding and thorough analysis to ensure the claim meets the criteria.
