Research & Development Claim Statistics 2020: What Trends Are Emerging?
In September, HMRC released the Research & Development (R&D) tax credit statistics, providing an opportunity to analyse the current use and state of the scheme.
If 2020 has taught us anything, it’s that not everything is predictable. Businesses need to be supported, and the R&D tax credit scheme is a proven way to increase investment into innovation and growth. It therefore remains key to the UK’s economic recovery over the next few years.
Key findings and summary
Returns for the latest financial year (2018/2019) can still be submitted, meaning that the data for this year is not yet complete.
For this reason, this blog post compares the years of 2016/2017 and 2017/2018, however we have xincluded statistics from 2018/2019 where necessary as they provide a wider picture to trends in the R&D tax credit landscape.
Since 2000, which is when the R&D tax credit scheme was launched, and 2019, over 300,000 claims have been made with over £33.3bn in tax relief claimed.
The report found that:
- In 2016/2017, there were 53,015 R&D claims filed in the UK.
- In 2017/2018, there was an increase in 17% from the previous year, with 62,095 claims filed.
- As of 30th June 2020, there have been 59,265 claims filed for 2018/2019, however this is expected to rise. The scheme has already surpassed the £5.1 billion claimed in the previous year.
Location & Industry
The statistics show that the majority of R&D claims are concentrated in companies with a registered office in London, the South East or the East of England.
In the last full financial year (2017-2018), the following locations saw the largest increase in the amount claimed:
- The West Midlands, with an increase of 30%
- Wales, with an increase of 27%
- Northern Ireland with an increase of 26%
They report also shows that the following industries have continued to have the greatest volume of claims:
- Manufacturing – claiming £1.48 billion
- Professional, Scientific and Technical – claiming £1.2 billion
- Information and Communication – claiming £960 million
These sectors make up a total of 66% of claims over the last two years and 71% of claims for 2018-19 so far.
The industries that have claimed the highest amounts in 2017 – 2018 when compared to the previous year are:
- Construction, with a 51% increase (£220 million)
- Waster sewage and waste, with a 50% increase (£30 million)
- Health & social work, with a 50% increase (£30 million)
- Education, with a 42% increase (£50 million)
It is likely that these large changes are a result of wider adoption of innovations such as emerging construction methods, Low Impact Development techniques and the emerging impact of AI.
What can be concluded?
The report has highlighted that more companies are benefitting from the R&D scheme every year, with awareness of qualifying activities growing.
Although other financial solutions have been available, the report has also highlighted that with the outbreak of the coronavirus, some businesses have been encouraged to file an R&D claim to lessen the impact that COVID has had on their business.
Innovation 4 Business
Even if your business has not been financially impacted by the coronavirus, the R&D tax credit scheme can help fund innovative activities so that your company can grow, invest and recruit.
The UK economy benefits from increased productivity and innovation, and so the government are likely to continue in support of the scheme for the foreseeable future.
The industries mentioned above do not form an exhaustive list of sectors that qualify for R&D tax credits. Whatever size or sector, if your company is taking a risk by attempting to resolve scientific or technological uncertainties, then you may be carrying out qualifying activity. This includes creating or modifying products, processes or services.
If you are preparing for your first claim or would like support maximising the value of your next, contact our experienced R&D consultants on 0121 309 0222 or email firstname.lastname@example.org.