The annual R&D stats have been released by HMRC, the key points are:
- Total R&D tax relief claimed in the year was £7.6 billion, an increase of 11% from the previous year. This corresponds to £44.1 billion of R&D expenditure, an 8% increase on the previous year.
- It is estimated that the total number of R&D tax credit claims for 2021-2022 was 90,315 an increase of 5% from the previous year, with a rise in claims made across both SME and RDEC schemes.
- 11,115 RDEC scheme claims were made, of which 6,420 claims were made by SME’s claiming under the RDEC scheme because they undertake R&D as subcontractors or the R&D is subsidised and can not claim under the SME scheme.
- The total support claimed through the SME scheme has increased by 14% compared with the previous year, and total support through the RDEC scheme has increased by 7%. HMRC attribute this in part to recovery from the COVID-19 pandemic.
- Of the total £44.1 billion R&D tax relief claimed 60% was claimed by companies under the RDEC scheme.
- There has been a decrease in the number of first time applicants for the second year in a row
Whilst it is interesting that the number of first time claimants has decreased again given the size of the reduction it is unlikely this is as a result of HMRC’s actions to clamp down on error and fraud and we can surely expect a much bigger drop in next years stats in terms of total and first time claimants.
The stats also highlight the number of SME’s claiming under RDEC for subcontracted or subsidised work and who will likely lose their claims under the proposed merged scheme. The legislation for the merged scheme as currently drafted follows the existing SME rules enabling companies to claim for payments made to subcontractors, meaning SME’s undertaking R&D for large companies will no longer be able to claim.
This is interesting as when HMRC published the policy paper which sat alongside the draft legislation the section quantifying the impact to the exchequer had been left blank and it was stated the measure was not expected to have any significant macroeconomic impact. You might well argue the 6,420 claims made, and the £415m relief given for them is not significant but the relief is very likely to be significant for the businesses claiming it. It doesn’t make sense to rush through the proposed changes when there are such complex issues that need to be addressed, let’s hope the proposed implementation date of 1 April 2024 gets pushed back in the Autumn Statement.
If you need help understanding what the proposed changes mean for your R&D claim please get in touch.
