R&D TAX CREDIT CLAIMS FALL 17% AS RELIEF RISES TO £8.2BN

Research and development tax credit claims fell by 17 per cent in the 2024 to 2025 financial year, according to statistics published by HMRC. The tax authority estimated 40,325 claims were made, while total relief claimed rose to £8.2bn. HMRC attributed the fall to an estimated 19 per cent drop in claims from small and medium-sized enterprises (SMEs), while claims from large companies rose by an estimated 4 per cent. Total relief claimed rose by 5 per cent, corresponding to £51.0bn of R&D expenditure, up 7 per cent on the previous year.

HMRC said the average claim value rose by 27 per cent, driven by claims worth more than £2m, which increased by 14 per cent in number and 21 per cent in value. It said 6 per cent of claims accounted for 69 per cent of the total relief claimed. Large companies received £4.6bn of relief, while SMEs received £3.6bn. Relief claimed through the SME and enhanced R&D intensive support schemes fell by 29 per cent to £2.3bn, which HMRC linked to SMEs moving to the new merged R&D expenditure credit scheme. Relief claimed through the R&D expenditure credit and merged schemes rose by 29 per cent to £5.9bn.

HMRC said the figures are provisional and will be revised next year. It said the fall in claim numbers was driven by the continuing impact of the additional information form, mandatory for all claims since August 2023 to improve compliance. The tax authority has increased scrutiny of claims after estimating that fraud and error in the R&D schemes totalled £4.1bn between 2020 and April 2024. Justine Dignam, a partner at Claritas Tax, linked the figures to the government's reindustrialisation plans.