R&D Tax Relief Statistics 2020-21

HMRC have published statistics on R&D tax credit claims for the tax year 2020/21. These statistics are indicative of how businesses reacted during the pandemic. With a decrease of 11% in R&D expenditure, it can be clearly seen that businesses moved away from investing in R&D activities undoubtedly in favour of protecting existing, less risky offerings. This point is reinforced by an overall 10% decrease in the average value of claims in this period.

Staying consistent with themes from previous years, the value of support claimed is split between, SME’s at 64% versus RDEC at 36%. The volume of SME claims still far exceeds the volume of RDEC claims, however 59% of a total of £38.1billion of qualifying R&D expenditure, was incurred by RDEC entities. This shows that while the number of RDEC claims are significantly less than the number of SME claims, they still make up the majority of qualifying R&D expenditure in the UK.

In addition to the point above, it is interesting to note that the support claimed by RDEC companies decreased by 13% from the prior year – even in light of the RDEC percentage rising from 12% to 13% from 1st April 2020. This suggests that more may need to be done to entice these larger Corporates to invest in R&D activities, especially as the UK also falls behind the OECD average of R&D expenditure as a percentage of GDP.

Whilst awareness around both the SME & RDEC regimes continues to grow, it can be clearly seen that main concentration of claims centres on the London market. This is naturally proportional with Corporate demographics but it does show that regionally at least, the North East of England, Wales, Scotland and Northern Ireland are somewhat lagging behind.

The dominant sectors of Manufacturing, Information & Communication and Professional, Scientific & Technical, make-up 62% of the total claims. This is consistent with previous years as these industries continue to show that they are hotbeds of innovation within the UK.

A very telling statistic is that this is the first time in 14 years that there has not been growth in the number of first time SME claimants. With a concentration of SME claims in the lower bands (72% of which up to £50k), this again reinforces the point that the focus from businesses was first and foremost on tackling the uncertainty from Covid, rather than pursuing innovation.


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