SME R&D claims fall 19% as HMRC tightens the gate
HMRC counted 40,325 R&D tax credit claims in 2024-25, down 17 per cent, while the money claimed rose to £8.2bn. Fewer, bigger claimants are taking more of it.
The number of research and development tax credit claims fell by 17 per cent in the 2024 to 2025 financial year, according to HMRC statistics published on 29 September. The tax authority estimated 40,325 claims in total.
Small and medium-sized companies drove the drop. HMRC estimated a 19 per cent fall in SME claims, while claims by large companies rose by an estimated 4 per cent.
The money did not follow the claimants. Total relief claimed rose 5 per cent to £8.2bn, against £51.0bn of R&D expenditure, itself 7 per cent higher than the year before.
The average claim rose 27 per cent. HMRC said that was driven by claims over £2m, which rose 14 per cent in number and 21 per cent in value.
Concentration is the headline figure for anyone running a small company. HMRC said 6 per cent of claims accounted for 69 per cent of the total relief claimed.
Large companies took £4.6bn across the schemes. SMEs took £3.6bn.
Relief through the SME and enhanced R&D intensive support schemes fell 29 per cent to £2.3bn. HMRC attributed that largely to SMEs moving to the new merged R&D expenditure credit scheme, and to new SME rates applying for a full year of expenditure. Relief through RDEC and merged RDEC rose 29 per cent to £5.9bn.
These are the first statistics to cover the merged RDEC scheme and ERIS, introduced for accounting periods beginning on or after 1 April 2024. HMRC said the scale of the changes means SME-level figures for 2024-25 are not comparable with previous years. The latest year's figures are provisional and will be revised.
On the fall in claim numbers, HMRC pointed at paperwork. It said a key driver is believed to be the continuing impact of the additional information form, mandatory for all claims submitted since 8 August 2023.
The form exists because the money was leaking. HMRC estimated fraud and error in the R&D schemes at £4.1bn between 2020 and April 2024, and has increased its scrutiny of claims since.
Justine Dignam, a partner at Claritas Tax, said the regime now favours those with the staff to handle it. She contrasted a large company's resources with a 20-person engineering firm facing the same process.
HMRC has defended its approach. In April 2025, as a technology start-up disputed a demand to repay its credit, a spokesperson said the reliefs play a vital role in boosting growth and that HMRC is committed to a straightforward claims process for genuine claimants.
For a founder planning a claim, the practical reading is that the cost of claiming has risen and the enquiry risk with it. Budget your time for the additional information form and the possibility of a protracted enquiry, and know which scheme your accounting period falls under before you count the cash.
Chancellor John Healey delivers his first Budget on 28 October. Dignam has called for R&D relief to be made simpler, more generous and more accessible to SMEs in it.