According to HMRC, here’s an overview of the R&D Tax Credit statistics for the 2023-2024 tax year:

1. Estimated Total R&D Tax Relief Claimed
   • £7.6 billion, reflecting a 2% decrease from the previous year.
2. Tax Relief Claimed Through the SME Scheme and RDEC
   • Total relief under the SME scheme decreased by 29% to £3.15 billion.
   • On the other hand, relief claimed under the RDEC scheme rose by 36%, reaching £4.41 billion.
3. Total Number of R&D Tax Credit Claims
   • 46,950 claims in total, down by 26% compared to the previous year.
   • 36,885 claims under the SME scheme.
   • 10,065 claims under the RDEC scheme.
   • Both SME and RDEC schemes saw a reduction in claims.
4. Impact on the SME Scheme
   The number of claims for the SME scheme dropped by 31%. While the RDEC scheme saw a smaller decline of 5%.
5. Changes in Claim Value
   • There’s been a notable decrease in claims under £15,000, while claims over £250,000 have increased.
   • This shift resulted in a 33% rise in the average value of claims, despite a significant drop in the number of claims. The overall cost has grown slightly as a result.
6. Sector Breakdown
   • The Information & Communication (26%), Manufacturing (26%), and Professional, Scientific & Technical (19%) sectors continued to dominate, making up 72% of total claims and 71% of the total amount claimed for 2023-2024.
7. Decline in First-Time Applicants
   • First-time applicants dropped by 41%, marking the fourth consecutive year of decline in this category.

Insights

HMRC stated a few years ago that they felt up to 50% of all SME R&D Tax Credit claims were in error.

In the 2020-2021 period the volume of SME R&D tax credit claims filed was over 75,000. In 2023-2024 this amount is now 36,885.

It appears that through increased compliance checks, the requirement to file additional information and substantially reducing the R&D tax credit for SME’s that HMRC is achieving its goal to reduce claims filed error. 

The 2023-2024 period is the first year where we see the impact of the substantially reduced R&D tax credit rates for the SME program.

We expect this trend of decreasing SME R&D Tax Credit filings to continue to the next period as the new merged RDEC scheme came into effect for accounting periods commencing after 1 April 2024.

While RDP agrees that there were far too many R&D Tax Credit claims filed by SMEs in the past that were in error, there comes a point where one must ask if the SME scheme is offering SME’s enough of an incentive.

The R&D Tax Credit rates for Ireland, the Netherlands, Germany and France are all over 30%. With the exception of R&D intensive SMEs in a tax loss position the current R&D Tax Credit rate under the new merged RDEC scheme in the UK is between 15%-16.2% roughly half what neighbouring countries are offering.

What message is the government sending to the SME community in terms of its R&D efforts?

How can RDP help with your R&D Tax Credit claim?

Assessing an eligible R&D project is not a straightforward task.

RDP has assisted in filing over 10,000 R&D Tax Credit claims for the past 35 years.

Our technical team of software specialists, engineers and  technology  professionals have the academic and industry experience to identify eligible R&D projects and prepare the necessary information that meets HMRC requirements.

RDP can assist in assessing if the company is eligible to make an R&D Tax Credit claim at no charge. This typically occurs over a short 20 to 30-minute call with the company.

If you and / your  clients are interested in our free assessment or want to know more about how to make an R&D Tax Credit claim or obtain more of our thoughts regarding the most recent statistics. Please contact Jenni at [email protected]