SME R&D tax credit claims fall

The number of small and medium-sized firms claiming research and development tax credits fell sharply last year, according to new figures.

The provisional estimated total number of research and development tax credit claims for the tax year 2022-2023 was 65,690, a fall of 21 per cent, according to HM Revenue and Customs (HRMC).

And although the total relief support claimed rose by one per cent to £7.5billion, the number of claims dropped by 23 per cent in the small and medium-sized enterprise scheme.

Revealing the figures HMRC said: “The large fall in the number of R&D claims for the tax year ending March 2023, in particular for the SME scheme, follows the implementation of the additional information form (AIF).

“This form requires companies to provide additional information to support an R&D claim and was made mandatory for all R&D claimants for claims submitted to HMRC from 8th August 2023.

“This requirement was brought in alongside other administrative changes to the schemes in order to improve levels of compliance in the R&D reliefs.”

The Information and Communication, manufacturing, and professional, scientific and technical sectors continued to have the greatest volume of claims, making up 67 per cent of that total and 70 per cent of the amount claimed for the tax year.

In the 2022 Autumn Statement widespread changes to R&D relief rates were announced, taking effect from April 1, 2023 onwards.

There were warnings that tens of thousands of innovative small firms would scale back investment if the then Conservative government pressed ahead with plans to “slash” R&D tax support for SMEs.

HMRC says the impact of the changes that were made “are not yet fully reflected in the statistics”.

To discuss if your business is eligible for R&D tax relief please get in touch on 01772 430000.