WhisperClaims’ take on the Research and Development Tax Credit Statistics 2021
HMRC released the annual Research and Development Tax Credit statistics last week to little excitement or fanfare. These statistics have been an annual event for the R&D tax relief advice sector for many years, but have become so stable that it’s difficult to think of what to say about them!
The headline stats remain incredibly consistent – the number of claims continues to increase, on average, by 20% year on year, and the amount paid out follows the same trend. Companies registered in London continue to receive the lion’s share of the benefit, although it’s true to say that a significant proportion of these companies won’t be carrying out their R&D within London (we’re one of those!).
Even the breakdown of claims by sector remains remarkably consistent, with the Information and Communication, Manufacturing and Professional, Scientific and Technical sectors accounting for 63% of claims for financial year 19/20.
My favourite stat changed slightly, with 73% of 2019/20 claims having less than £50k of tax benefit, compared to 76% in 2018/19, but even that isn’t statistically significant. It’s also interesting to note that 17% of 19/20 claims had less than £5k of tax benefit. These are all statistics that align with what we see going through the WhisperClaims platform.
The last statistic we’ll highlight is the proportion of claims made by first-time claimants – this remains at 30%, which is astounding for a scheme that has reached that grand old age of 21! Unfortunately, HMRC doesn’t provide details of what sectors these companies are operating in, so it’s difficult to comment on where these new entrants might be coming from.
What does this all mean?
From our perspective, this all suggests that the scheme is now fully mature and embedded in the tax landscape. The scheme continues to grow as awareness continues to rise and it’s great to see businesses continue to invest in R&D and to access the scheme.
We do expect that the 2022 statistics will be far more interesting! The combined effects of Brexit, COVID-19 and HMRC’s increased rate of enquiries throughout 2020 and 2021 could lead to a reduction in the number of claims. Based on our observations from the WhisperClaims app and more pointedly from the questions we’re seeing coming up through our support line and webinars, we’d also expect to see more SMEs claiming under RDEC due to COVID-related funding, and potentially an overall reduction in the amount of eligible expenditure claimed due to lockdown. Watch this space!
If you’d like to read the stats in full, click here: www.gov.uk/government/statistics/corporate-tax-research-and-development-tax-credit/research-and-development-tax-credits-statistics-september-2021
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- £100 million identified in eligible spend, with over £25m given back to SMEs in tax benefits
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