In September, HMRC released their annual breakdown of tax relief claimed under the R&D tax credits and Patent Box schemes.
R&D tax relief stats for the 2024-2025 period
The key takeaway is that the SME market is making fewer claims, as the overall value of R&D claims has risen but shifted to large businesses. HMRC estimates that claims made by SMEs fell 19% year on year across all schemes, while large company claims rose 4% to approximately 3,800. This is a direct impact of the merged RDEC scheme coming into play in combination with the increased administrative burden and compliance efforts businesses face.
If large companies are the winners, are SMEs the losers?
More of the claim value is associated with large companies, which rose from approximately £3.73bn to £4.61bn (about +24%). The value claimed by SMEs fell from approximately £4.07bn to £3.60bn (about −12%). Large companies therefore account for roughly 56% of 2024–25 support, up from 48% a year earlier. HMRC also reports a 14% rise in qualifying expenditure claimed by large companies, against a 3% fall for SMEs.
Large claims account for an increasing share of value claimed. Claims for £500,000 or more represent only 6% of the number of claims, but 69% of the value claimed, up from a 62% share of support in 2023–24. Within that group, 560 claims exceeding £2 million account for £4.03bn, nearly half of the total. HMRC says the full-year effect of the higher RDEC rate partly explains the increased share of value in larger claim bands.
Does a rise in the value claimed mean more R&D activity performed?
The rise in value claimed should not be read as an equivalent rise in R&D activity. Relief rates and the overall mix of schemes has changed. HMRC suggests qualifying expenditure is a better comparator across the recent reforms; on that measure, expenditure used in claims increased by 7%. It is still a measure of expenditure used to claim relief, rather than all UK R&D spending.
The impact of Enhanced R&D Intensive Support (ERIS)
HMRC does not report ERIS claimants separately in the 2026 tables. It groups ERIS with claims under the earlier SME intensive provisions (this covers ERIS formally and the SME intensive scheme between 1 April 2023 and 31 March 2024). The year-on-year figures are therefore for the combined intensive category, and they count claims rather than unique companies.
This group potentially represents qualifying expenditure of £708k on average and an approximate £172k average claim value for claimants in 2024-2025.
Which sectors are claiming R&D tax relief
The three largest sectors still account for 75% of claims and 71% of claim value, that is Manufacturing, Professional, Scientific & Technical and Information and Communication.
Computer programming and consultancy remain a large source of claims, although its count fell from 9,790 to 8,680; support rose slightly from £1.265bn to £1.295bn. Scientific research and development moved in the other direction on both measures: 2,265 to 2,385 claims, and £930m to £1.055bn of support. These are SIC classifications, not judgments that every activity within those businesses qualifies.
Patent Box tax relief stats for 2024- 2025 period
The headline is that Patent Box tax relief is projected to reach £2.283bn in 2024–25, up 23% from £1.857bn in 2023–24, while the number of companies electing into the regime is projected to rise only 2%, from 1,695 to 1,735. Source Advisors have had a hand in at least 8 of the 40 new companies elected into the scheme for that period, which we are rightly proud of.
A few points stood out, although the trends are largely similar compared to previous years:
Most of the growth is in larger claims. The 145 companies receiving more than £1m of relief account for £2.105bn, or 92% of the projected total. Relief in that band increased by £419m, compared with a £426m increase across all claimants.
The increase is not simply a sign of more companies claiming. HMRC points to the continuing effect of the 25% main Corporation Tax rate and a recovery in eligible profits as the main reasons for the higher value of relief.
Some elections produce no relief in the year. HMRC projects that 185 companies elected into Patent Box but received £0 relief in 2024–25. This may be due to nil claims and elections during patent pending phase, where patents are yet to grant.
Manufacturing accounts for 60% of electing companies, although the statistics also show claims across a wider range of sectors. Given this is based on SIC code, it’s probably not the most accurate indicator for sector breakdown.
