R&D Tax Credit Statistics 2026: Why SME Claims Are Falling (And What It Means for You)

HMRC published its latest R&D tax credit statistics in September 2026, covering claims for the 2024/25 tax year — and the headline is stark. The number of companies claiming R&D tax relief fell sharply, even as the total amount of relief being paid out went up. Fewer claims, bigger claims, and a widening gap between what large companies are doing and what SMEs are doing.

If you run a smaller UK company doing genuinely innovative work, these numbers are worth five minutes of your time — because the trend they describe might be working against you even if nothing about your business has changed.

The headline numbers

The scale of the shift is bigger than most people expect:

• Total claims fell 17% — from 48,610 to 40,325 in a single year.
• SME scheme claims fell 19%, while large-company (RDEC) claims rose 4% — the decline is overwhelmingly a small-company story, not an across-the-board one.
• Qualifying R&D expenditure rose 7% to £51.0bn.
• Total relief paid out rose 5% to £8.2bn.
• Average support per claim rose from roughly £160k to roughly £203k.

Put those together and the picture is clear: fewer companies are claiming, but the ones still claiming are claiming more. Zoom out further and it's starker still — since 2021/22, total claim volume is down 52%, even though qualifying R&D expenditure is up around 12% in cash terms over the same period. (Source: GOV.UK — Research and development tax credits statistics, September 2026.)

This is also the first release where HMRC has broken relief down by scheme in this way: £2.3bn went through the SME scheme and ERIS combined, against £5.9bn through RDEC and the merged RDEC scheme. The merged scheme — a single 20% expenditure credit for accounting periods beginning on or after 1 April 2024 — now dominates the numbers, with the old standalone SME scheme increasingly a minority share.

Why are SME claims falling?

There's no single cause, but three things have been running in the same direction since 2021:

1. A sustained compliance crackdown. HMRC significantly increased scrutiny of R&D claims following well-documented fraud and error problems in the SME scheme. Enquiry volumes rose, and — as our piece on the WMBC enquiry team change explains — the enquiry process itself has become more structured and, for some claimants, more intimidating. Some SMEs with genuinely qualifying work have simply decided the hassle isn't worth it. Others never had a strong claim in the first place, and the scrutiny has pushed them out — which HMRC would call the policy working as intended.

2. Scheme reform and the merged scheme transition. The move to a single merged RDEC-style scheme for accounting periods from 1 April 2024 changed the mechanics, the paperwork, and — for loss-making, R&D-intensive companies — introduced the Enhanced R&D Intensive Scheme (ERIS) as a separate, more generous route where qualifying R&D is at least 30% of total relevant expenditure (CIRD123000). Any scheme transition creates a window where some companies miss a claim simply because the process changed under them.

3. Mandatory process requirements. The Additional Information Form and more detailed claim-notification rules — both introduced to tighten up quality — add administrative steps that smaller, less well-advised companies are more likely to get wrong or skip entirely, losing the claim on a technicality rather than on the underlying eligibility of the work.

None of this means the underlying rules about what qualifies have become dramatically stricter. The core test — an advance in science or technology that resolves genuine scientific or technological uncertainty (CIRD81900) — is the same test it's always been. What's changed is the compliance environment around it.

What this means if you've stopped claiming — or never started

If your company is doing work that sounds like R&D — solving technical problems that don't have an obvious off-the-shelf answer, iterating through failed approaches, building something that didn't exist before in your sector — the falling claims count is not a signal that HMRC has decided you don't qualify. It's much more likely to reflect smaller companies losing confidence, losing the thread administratively, or simply not having anyone check whether their work still qualifies after all the recent changes.

Two practical angles worth checking:

• If you claimed before and stopped: you may still be able to go back. Our guide to how far back you can claim covers the time limits.
• If you're claiming now: the bar for a clean, defensible claim has genuinely gone up, even if the eligibility test hasn't. Our R&D tax credit checklist covers the steps that most often get missed under the newer rules.

Sector matters too — manufacturing remains one of the largest sources of genuine, qualifying R&D activity in the UK economy (see our guide for manufacturing companies), and is a useful benchmark for what a solid, well-evidenced claim looks like even as overall volumes fall.

A smaller but growing story: Patent Box

Away from the headline R&D numbers, HMRC's companion Patent Box statistics for 2024/25 tell a different story: 1,735 companies elected into the Patent Box, up from 1,695 the year before, and average SME relief rose 18% to £100,813. It's a much smaller population than R&D tax relief, but it's growing in both companies and average value — and it's still widely under-used relative to how many UK companies hold patentable IP. If you hold a granted patent, or are developing something patentable, it's worth reading alongside R&D relief rather than in isolation — see our guide to how the Patent Box works.

Frequently Asked Questions

Why are R&D tax credit claims falling in the UK?

Total claims fell 17% in the 2024/25 tax year (40,325 vs 48,610), driven almost entirely by a 19% fall in SME scheme claims — large-company RDEC claims actually rose 4%. The fall reflects a sustained HMRC compliance crackdown since 2021, the transition to the merged R&D scheme for accounting periods from April 2024, and new administrative requirements like the Additional Information Form, rather than a change to what technically qualifies as R&D.

Does this mean HMRC is cracking down on all R&D claims?

Not evenly. Large-company claims rose while SME claims fell sharply, and total qualifying expenditure and total relief paid both rose — meaning the claims that remain are, on average, bigger and (on the evidence of continued payouts) well-evidenced. The pattern looks more like smaller, less well-prepared claims dropping out than a blanket tightening of the underlying rules.

Is R&D tax relief still worth claiming in 2026?

Yes, for companies doing genuinely qualifying work. Average support per claim rose from around £160k to around £203k, and total relief paid out rose 5% to £8.2bn — the relief remains substantial for companies that can evidence their claim properly under the current rules. The bar for a clean claim has gone up, which is exactly why getting the process right (claim notification, Additional Information Form, technical narrative) matters more than it used to.

Figures in this article are drawn from HMRC's Research and development tax credits statistics, September 2026 release, covering the 2024/25 tax year.