The world of R&D tax credits is ever-evolving, and the latest statistics from HMRC for the tax year 2021-2022 are out!
Here's a breakdown of the key points and what they mean for your business:
The Big Picture
- Total R&D Tax Relief: A whopping £7.6 billion was claimed in R&D tax relief, marking an 11% increase from the previous year (although the sharp uptick could be a bounce back from the COVID-lull as projects were temporarily shelved and then revived last year)
- Total Number of Claims: 90,315 claims were made, a 5% rise from last year, indicating that more companies are taking advantage of the scheme
- Average Value of Claims: The average claim value increased by 6%, driven by a 9% rise in the SME scheme. This could be a sign that companies are recovering from the COVID-19 pandemic and ramping up their R&D activities.
- London and the South East: These regions continue to dominate, with 22% and 15% of total claims, respectively. However, it's worth noting that the registered office location doesn't necessarily indicate where the R&D activities are taking place.
- Information & Communication, Manufacturing, and Professional, Scientific & Technical sectors: These sectors are the frontrunners, making up 62% of total claims and 67% of the total amount claimed.
- SME Scheme: There was a 3% decrease in first-time applicants, signalling a potential saturation point or hesitancy among new entrants...
- RDEC Scheme: A 14% increase in first-time applicants was noted, indicating growing interest among larger companies or those unable to claim under the SME scheme (e.g. due to receipt of grants).
Changes in relief rates were announced in the 2022 Autumn Statement and Spring 2023 Budget event. The SME enhancement rate has been decreased to 86%, and the RDEC rate was increased to 20%.
These changes will take effect from 1 April 2023, and are not yet reflected in the current statistics.
The latest HMRC statistics reveal a mixed bag of results for R&D tax credits, especially for SMEs. However, changes are on the horizon (including HMRC's recent heightened activity in challenging claims), and so it's crucial to stay updated to maximise your benefits.
Next year's report could be super interesting...