HMRC’s latest R&D Tax Credits and Patent box statistics

HMRC’s latest statistics on the R&D Tax Credits and Patent Box were published on 30^th September, our experts have put together a short summary of the key information.

R&D Tax Credits

As of 30 June 2020, there have been 59,265 R&D Tax Credit claims for 2018-19, of which 52,160 are in the SME R&D scheme. (This is based on partial data for the year and expected to increase as more returns are received.)

As of 30 June 2020, £5.3bn of R&D tax relief support has been claimed for 2018-19, corresponding to £35.3bn of R&D expenditure.

In 2017-18 the total number of claims for R&D tax credits rose to 62,095, an increase of 17% from 2016-17. The increase was primarily driven by a rise in the number of SME claims, which totalled 54,005 in 2017-18, an increase of 19% from 2016-17.

The total amount of R&D support claimed increased to £5.1bn in 2017-18, an increase of 15% from the previous year.

The total value of R&D expenditure against which claims were made was £36.5bn in 2017-18, an increase of 8% from the previous year.

Geographical spread:

There was a concentration of R&D claims from companies with a registered office in London, the South East or the East of England (45% of all claims and 60% of the total amount claimed for 2018-19). However, the regional split is based on the registered head office location so may not be where all the R&D activity takes place.

Areas of growth:

The ‘Manufacturing’, ‘Professional, Scientific and Technical’, and ‘Information and Communication’ sectors continued to have the greatest volume of claims, making up a total of 66% of claims and 71% of the total amount claimed for 2018-19.

There have been 15,750 first time applicants for R&D tax credits in 2017-18, an increase of 10% from the previous year. This increase is largely driven by SME companies.

Between 2000-01, when the R&D Tax Credit schemes were launched, and 2018-19, over 300,000 claims have been made and £33.3bn in tax relief claimed.

Patent Box Relief:

In 2017-18, 1,305 companies claimed relief under the Patent Box, and the total value of relief claimed was £1,101 million.

The value of relief claimed increased year on year from 2013-14 to 2015-16 as the benefit of the Patent Box was phased in, and this continued in 2016-17 and 2017-18.

Of the companies that claimed in 2017-18, 28% were classified as ‘Large’, but these companies accounted for most of the relief claimed (92%).

Key sectors:

Over half (715) of the companies that claimed in 2017-18 were in the Manufacturing sector (including Pharmaceuticals), accounting for 30% of the relief.

The highest proportion of relief (34%) was claimed by companies in the Financial and Insurance sector, despite only 10 companies claiming relief.

Geographical spread:

The number of companies claiming relief varies significantly across UK regions. The fewest number of claims were made from the North East (2% of the total in 2017-18), and the most were from the South East (16%); although London-based companies claimed the largest amount of relief (47%).

Sources:

https://www.gov.uk/government/statistics/corporate-tax-research-and-development-tax-credit

https://www.gov.uk/government/statistics/patent-box-reliefs-statistics