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HMRC R&D Tax Credit Statistics – Who Is Claiming The Most? 

by Adam Park | November 29, 2022

On September 29th HMRC released the latest R&D tax credit statistics for 2022. These stats confirm that innovation continues to be key to the success of UK businesses – even during the most testing time of the pandemic.

The new tax credit statistics released include finalised figures for the 2018-2019 and 2019-2020 tax years, as well as projected numbers for 2020-2021. These numbers offer some insight into which sectors are claiming and where these claims are coming from.

HMRC stats 2022 – the key headlines

The total value of R&D tax relief for 2020-2021 is now projected to be nearly £6.6bn. While these are very large numbers by any measure, the projected value of R&D tax relief claims for 2020-21 has fallen (11% reduction) on previous years for the first time ever this year. 

The rise in the costs of the R&D scheme has attracted national attention in recent years resulting in a considerable body of work to help contain those costs. What these stats now tell us is that firstly, the projected costs of the R&D schemes have come down, and more importantly, the projected values of the 2019-2020 claims were actually £600m overstated. 

Which sectors are claiming the most?

Although the R&D Tax Credits scheme is open to all UK companies regardless of size or industry, there are naturally certain sectors that are bigger claimants than others.

Interestingly, but perhaps unsurprisingly, the highest number came from the Information and Communication sector at 22% of all claims. This was closely followed by Manufacturing at 21% and the Professional, Scientific and Technical sectors at 19%.

Which regions are claiming the most?

As usual, HMRC’s statistics show the regional breakdown of R&D comes with a caveat – the distribution is based on a company’s registered address and is not necessarily representative of where R&D activity is carried out.

Taking London out of the picture provides a clearer view of the regional spread of R&D. Proximity to the capital is still a factor, with the East of England the next hotspot for R&D investment.

Claims are more evenly spread between other regions, although the South West is at risk of falling behind in terms of total expenditure – despite being known for its innovative start-up culture.

Has Covid affected the numbers? 

There is evidently a significant reduction in overall R&D expenditure for the year ending 2021 and arguably Covid has been a factor in this. The stats imply that some, but not all, R&D activity continued throughout the first year of the pandemic and that the pandemic necessitated R&D as companies looked for solutions to global problems and new ways of working through lockdown.

It may be that there will be more of an impact in 2021-22 as companies continue to recover from Covid and face other challenging economic conditions. It’ll be important to see this number recover quickly, and hopefully any new policy announcements will be directed to encourage this.

Can using the services of an R&D specialist help improve your claim? 

On a daily basis, business innovation takes place across all industries, and research and development (R&D) plays a large role in this process. Yet surprisingly, there are many businesses that are underclaiming or not claiming at all via HMRC’s R&D tax relief scheme. This could be due to businesses having a lack of knowledge of the scheme, time restraints meaning they don’t have capacity to make a claim, or perhaps because they mistakenly believe they don’t qualify.

When making an R&D claim, employing the services of a specialist advisor will ensure you get the best possible results. At Zest R&D we specialize in preparing and submitting R&D claims. Our priority is ensuring your R&D tax claim works for you. If you are considering making a claim for R&D tax relief or would like to discuss the status of an existing claim, please don’t hesitate to get in touch.

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