Yesterday HMRC released the latest statistics for the usage of the R&D tax relief and Patent Box schemes. Here’s an initial view of this year’s numbers.
HMRC statistics 2023 – the headlines
The total number of R&D tax relief claims for 2021-22 is estimated to be 90,315, a 5% increase from the previous year. The total value of R&D tax relief estimates at £7.6bn, up from £6.8bn. Over half of the total value claimed (£4.8bn) was through the SME scheme. HMRC attributes the increase in total value to potential COVID recovery as there was no growth in claim value in 2020-21 against previous years.
There has been an 8% increase to the previous year in qualifying expenditure, at £44.1bn.
For Patent Box, we’ve seen a change in how the statistics are recorded. Now, statistics are based on companies electing into the Patent Box, even if they do not have relevant IP profits to benefit from the scheme. The statistics reveal a decrease in the number of elected companies, 1,510 from 1,610 in 2020-21. However, the total value of Patent Box relief is up from £1.2bn to £1.36bn. This is driven by larger companies claiming more relief on average.
R&D tax relief claims by industry and region
For R&D tax relief, London is again home to the highest number of claimants as well as highest value claims. However, we know that the location of the registered office may drive this and may not be where the R&D activity takes place.
Manufacturing, Information & Communication, and Professional, Scientific and Technical continue to come on top for the highest volume of R&D tax relief claims.
Patent Box claims by industry and region
When it comes to Patent Box, large companies continue to take the lions share with 94% of value. The highest number of companies elected into Patent Box are in the manufacturing sector (61%), next closest is wholesale, retail, and trade at 11%
The number of companies elected into Patent Box is split fairly evenly by region, there are no standouts. However, the value claimed is massively concentrated in London with a 45% share. The next closest is East of England at 17%.
Error and fraud in R&D tax relief
As these statistics lag and are not reported in real-time, the change and turbulence that we have seen since the Autumn Budget in 2022 and throughout 2023 will be absent from these statistics. Error and fraud are only mentioned with reference (and a link back) to the statistics published in July 2023.
HMRC plans to publish an update on error and fraud statistics in Winter 2023.
