R&D tax claims by SMEs fall by 19%
HMRC data reveals that while total R&D tax relief payouts increased by 5%, the number of claims from SMEs dropped by 19% following stricter application checks. Large companies now account for 76% of all R&D tax relief expenditure.
Why it matters
The shift highlights the impact of regulatory crackdowns on small business innovation funding and a growing disparity in tax relief utilization between SMEs and large corporations.
Crackdown on abuse of R&D tax relief by SMEs sees sharp fall in number of claims but total paid out to all business up 5%
An overhaul of research & development (R&D) tax relief in the past year has resulted in major changes to the amount of claims being made.
Latest HMRC figures for 2024-25 show £8.2bn of total R&D tax relief was paid out over the year, up 5% from £7.8bn but claims by SMEs were down by 19% after HMRC tightened up application process with more robust pre-claim checks at the point of submitting a tax return.
Qualifying R&D expenditure totalled £51bn for the period, up 7% from 2023-24, but the number of claims dropped sharply by 17% to 40,325 claims, down by nearly a fifth in just 12 months.
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