Latest statistics from HMRC reveal larger but fewer R&D Tax Relief claims
New figures released by HMRC reveal that the value of the average R&D tax relief claim has increased, this is in contrast to perhaps the understandable, 20% fewer claims being made overall.
Provisional estimates published by HMRC for the 2022-23 year show that £7.5billion in tax relief was claimed across all innovative relief schemes. Equating to a 1% rise on the previous 12 months, that corresponds to £46.7 billion of R&D expenditure being spent by innovative UK businesses.
One sector likely to be a beneficiary is financial services. Keir Starmer's party gave specific mention to the sector, promising to encourage growth through support of technologies such as Open Banking and Open Finance.
Details of policies geared towards automotive, life sciences and creative sectors respectively were promised to be set out once in government. We, therefore, expect to hear more on this in due course.
Though the amount reimbursed did go up, the actual number of claimants dropped by 21%. This is the second consecutive year that R&D tax credit claims have fallen.
The brunt of this fall was at the lower end of the market with fewer claims of £15,000 or less, while claims exceeding £250,000 went up. Both the RDEC and SME schemes received less claimants, but the drop was more stark for the latter with a fall of 23% compared to just 9% for RDEC.
So, what to make of these figures? That the volume of claims being made is falling should be welcomed. For too long the schemes have been plagued by ineligible and even fraudulent claims, the expectation is that these are now being weeded out and disincentivised from seeking to pull the wool over HMRC's eyes.
It is also positive to see that the average value of eligible claims is rising. It means the scheme is doing what it was meant to do: support innovative UK businesses in their pioneering work. Genuine R&D benefits the wider society, as well as boosting the nation's economy. Investing in innovative work will only further that.
- Expert advice to wade through the added complexity of the R&D Tax Relief schemes has never been greater.
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James is a Content Writer at MMP Tax.
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