New R&D stats show spike in UK company innovation investment
New statistics released by HMRC today show UK companies significantly increased their levels of innovation investment in the 2021-22 tax year. The figures show £7.6bn in tax relief was claimed in that period, an increase of 11% from the previous year when claims plunged as the global pandemic took hold.
Conversely, the provisional estimated total number of R&D tax credit claims in the 2021-22 tax year was 90,315, an increase of 5% from the previous year. The increase is driven by a rise in claims across both the SME and RDEC schemes. The average claim value was £84,150, a 6% increase on the previous year driven by an average increase of 9% in the SME scheme.
The latest claims figures correspond to £44.1bn of R&D expenditure, 8% higher than the previous year, being made by UK companies.
After reaching a peak in 2018-19, the number of first-time SME scheme claimants has continued to decrease according to the latest figures. The number of first-time applicants for the RDEC scheme for larger companies has however seen a 14% increase from the previous year with 2,705 applications submitted for 2021-22 tax year.
Today’s figures once again show a concentration of claims by companies with London-registered offices (22% of total claims and 32% of total amount claimed), and those with South East-registered offices (15% of total claims and 18% of total amount claimed). HMRC has however pointed out that the registered office location may not be where all R&D activities actually take place.
In terms of industry sectors, the Information & Communication, Manufacturing, and Professional, Scientific & Technical sectors continued to dominate, making up 62% of total claims and 67% of the total amount claimed for the 2021-22 tax year.
Commenting on the figures, Visiativ tax director Douglas Reid said: “While today’s HMRC stats are provisional figures which will increase as the numbers are finalised, they are very welcome. They show a significant increase of 8% on R&D investment by UK companies which spent over £44 billion on innovation-focused activities in the 2022-23 tax year.
“The continued decline in first-time applicants to the SME scheme is noted and one I would anticipate to continue in light of new legislative changes that have now come into effect. I am however encouraged to see a major rise in first-time RDEC applicants, which is up by 14% from last year.
“Overall, these are positive figures which highlight how British businesses are recovering from the impact of Covid and ramping up their investment into innovation. This will ultimately benefit the UK economy going forward.”
