HMRC R&D Tax Credit Statistics 2020-2021
Research and Development (R&D) Tax Credits form a key part of Government strategy to boost innovation and is a highly rewarding scheme which allows UK companies to reduce their Corporation Tax liability and/or receive a cash injection from HMRC. It is one of the main incentives provided by government to encourage R&D spending, leading to greater investment in innovation. Since the R&D scheme began in 2000-01, over 560,000 claims have been made and £47bn in tax relief has been claimed.
The provisional estimate for the total R&D tax relief support claimed for the tax year 2020 to 2021 was £6.6 billion between the small and medium size (SME) scheme and the research and development expenditure (RDEC) scheme. Although it was a decrease of 4% from last year, the provisional estimated total number of R&D tax credit claims for the tax year 2020 to 2021 increased by 7% on the previous year at 89,300 claims.
The provisional estimate for the total R&D tax relief support claimed for the tax year 2020 to 2021 was £6.6 billion between the small and medium size (SME) scheme and the research and development expenditure (RDEC) scheme. Although it was a decrease of 4% from last year, the provisional estimated total number of R&D tax credit claims for the tax year 2020 to 2021 increased by 7% on the previous year at 89,300 claims.
Innovation Tax summarises the key points from the latest R&D Tax Credit statistics released by HMRC for the 2020/2021 tax year as follows:
- A 4% decrease in R&D tax relief claimed at £6.6 billion.
- A 11% decrease in R&D expenditure at £38.1 billion.
- A 7% increase in the total number of R&D tax credit claims at 89,300.
- A 7% increase in the number of SME claims at 78,825.
- A 10% decrease in the average value of claims.
- The Information and Communication, Manufacturing, and Professional, Scientific, and Technical sectors continued to have the greatest volume of claims, making up 62% of total claims and 70% of the total amount claimed.
The total number of R&D claims for the tax year 2020 to 2021 is estimated to be 89,300, an increase of 7% on the previous year.
This is comprised of 78,825 SME scheme claims, 3,990 claims from large companies (RDEC) and 6,485 claims from SMEs claiming under the RDEC scheme because they are undertaking the R&D as subcontractors. The driving factor in the growth has been more SMEs making claims at 7% and the 20% growth within the RDEC scheme. The Information and communications, manufacturing, professional, scientific and technical sectors continued to have the greatest volume of claims at 22%, 21% and 19% of the total claims respectively. Regionally, most of the claims were by companies with registered offices in London at 21%, the South East at 15% and the East of England at 12% of total claims.
The amount of qualifying R&D expenditure used to claim R&D tax relief is estimated to be £38.1 billion for the tax year 2020 to 2021.
A decrease of 11% from the previous year. Most of this expenditure at 59% was by companies claiming under the RDEC scheme. The decrease in expenditure from the previous year is primarily from the RDEC scheme at 20% whereas SMEs expenditure decreased by 5%. The current numbers are provisional and will be revised next year, which could result in large changes.
The total support claimed through both R&D schemes for the tax year 2020 to 2021 is estimated to be £6.6 billion.
A decrease of 4% from last year total. This comprised of £4.2 billion claimed through the SME scheme and £2.4 billion claimed through the RDEC scheme. Although the volume of claims under the SME scheme is much larger than under the RDEC scheme, the average claim size is generally much larger for the RDEC than the SME scheme. The total support claimed through the SME scheme has increased by 2% compared with the previous year. The total support claimed through the RDEC scheme has decreased by 13% since the previous year. Regionally, 31% of the total amount claimed was for companies registered in London, 18% for the South-East and 12% for the East of England. Industry wise, 25% of the total amount claimed was for Information and communication, 23% for manufacturing and 22% for the professional, scientific and technical sectors.
In the tax year 2019 to 2020, there was a 4% decrease in the overall number of first-time applicants from the previous year.
This is the first decrease in the number of first-time applicants since the tax year 2009 to 2010. The decrease is driven by a reduction in the number of first-time applicants within the SME scheme. Data for 2020 to 2021 first time applications has not been published yet.
At Innovation Tax we are seeing a growing amount of enquiries from new companies seeking to claim R&D Tax Credits.
We take pride in raising awareness of the incentive, along with ensuring we offer our clients the best possible advice on which types of activity and associated expenditure are compliant with the legislative criteria, to ensure all claims made are fully robust, maximised and stand up to HMRC scrutiny. To learn more about the R&D Tax incentive, visit our services page – R&D Tax Credits Experts – Innovation Tax
View the full HMRC R&D Tax Credit Statistics 2020-2021 here: Research and Development Tax Credits Statistics: September 2022 – GOV.UK (www.gov.uk)