01 Oct 2026

HMRC R&D Tax Relief Statistics 2024-25: What They Mean for SMEs

Ian Davie
Senior Consultant

The latest HMRC R&D tax relief statistics paint a mixed picture for UK businesses. While the overall value of R&D tax relief and qualifying R&D expenditure has increased, the number of companies making claims has continued to fall, with SMEs accounting for much of that decline.

HMRC Key Points

The headline figures include:

  • The total value of R&D tax relief claimed increased by 5% to £8.2 billion.
  • Qualifying R&D expenditure increased by 7% to £51 billion.
  • The total number of claims fell to 40,325, a decrease of 17%.
  • The decline was driven predominantly by SMEs, with SME claims falling by 19%, while claims from large companies increased by 4%.
  • Just 6% of claims accounted for 69% of the total value claimed. This represents 2,419 claims, with an average value of approximately £2.33 million per claim.
  • The number of first-time claimants did not fall for the first time in four years, with 5,850 companies making their first claim. However, this remains considerably below the peak of approximately 19,000 new claimants per year seen between 2018 and 2021.

For SMEs, these figures raise two important questions:

1. Why has the number of SME companies claiming R&D tax relief dropped by 17%?

2. Why has the overall value of R&D tax relief continued to rise despite fewer claims being made?

SME Company Claims Drop by 17%

The HMRC report states that it believes a key driver behind the decline in claims is the continued impact of the Additional Information Form (AIF), alongside wider measures introduced to improve compliance. However, I disagree with this view. While the AIF adds another reporting requirement, a standardised report does not prevent a company from making a claim.  The Claim Notification Form is, in my view, a far more significant factor.
The Claim Notification Form must be submitted within six months of the end of the relevant accounting period. I regularly speak with companies that are either unaware of this requirement or have been caught out because previous claims do not count towards the three-year exemption period. As a result, businesses that may otherwise have been eligible to claim are finding themselves unable to do so.

Another factor is the fear of an HMRC compliance check. There has been a 43% drop in SME claims with eligible costs below £25,000 between 2022/23 and 2024/25, alongside a 30% fall in claims with eligible costs between £25,000 and £100,000.

I do not believe this decline can be attributed solely to the AIF. Instead, SMEs may be increasingly discouraged from claiming due to the administrative burden associated with lower-value claims and concerns around the possibility of an HMRC compliance check.

The only band to see an increase in the number of claims was eligible costs between £100,000 and £250,000, rising from 6,375 claims in 2022/23 to 11,185 in 2024/25. Meanwhile, claims in the £250,000 to £500,000 band fell by 19%, despite the administrative burden being less likely to outweigh the potential value of the claim at this level.

Overall, the result is a significant decline in SME participation, with the number of claims falling from around 59,000 to 45,000.

The Rise in Claim Values

The amount of qualifying R&D spend increased by 7% to £51 billion, with 75% claimed under the relevant RDEC schemes. However, the number of claims fell from 48,620 to 40,325.

This represents an increase in the average eligible claim size from £98,000 to £126,000, which is a significant jump.

One factor will undoubtedly be the large reduction in lower-value SME claims, but this raises another question: why has overall qualifying R&D spend still increased by 7%, rather than falling in line with the number of claims?

The benefit rates across the relevant schemes remained relatively consistent between 2023/24 and 2024/25, so this does not explain the increase.

FY Large Companies Claims  Large Companies Benefit
23/24 3,650 £3,715 million
24/25 3,750 £4,555 million

 

There was a modest increase in the number of large companies claiming, but the value of the benefit received increased by a significant 18%. This suggests that large companies are driving much of the increase in both eligible R&D costs and the overall benefit claimed.

So, are large companies better able to identify and take advantage of the R&D tax relief available to them? This is particularly applicable as large companies can now claim certain sub-contracted R&D costs, an opportunity that was not previously available to them. This has also resulted in a significant shift in the proportion of support going to large companies. In 2023/24, large companies received 48% of the total support available. By 2024/25, this had increased to 57% of the total support.

Summary

Under the new regime of the two schemes, ERIS and RDEC, it appears to be SMEs that are feeling the greatest impact. Increased administrative requirements, Claim Notification Forms preventing some businesses from making a claim, greater scrutiny through HMRC compliance checks, and some companies simply deciding that claiming is no longer worthwhile are all contributing factors.

Meanwhile, large companies are now receiving the majority of the overall R&D tax relief benefit. The figures show a clear shift in where R&D tax relief support is being received and, unfortunately, it is not a particularly positive picture for SMEs.

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