HMRC statistics – our commentary

The government is giving more of a boost than ever before to the UK’s most innovative companies, according to the latest statistics. HMRC has provided information on the number of companies claiming research and development (R&D) tax credits and Patent Box for the year 2018-19 so far.


R&D tax relief highlights – what the stats tell us

It seems UK businesses have got the message about the value of R&D tax relief, the number of claims and the value of claims continues to grow year on year. SMEs account for a significant number of R&D claims and are reaping the rewards. We see companies claiming each year, it seems once you start looking for eligible expenditure there’s no going back. It becomes part of business as usual and funds future innovation and growth.

Overall, it’s an incentive that continues to deliver for UK business but there is the potential for certain sectors and regions to do more. Does there need to be more activity in the North of England or Scotland to meet the objectives of the levelling up agenda? Whilst claims from the information, communication and technical sectors predominate, do we need to see more support for R&D in manufacturing to better align with the government’s R&D roadmap. Is there an underrepresentation in agriculture, transport or energy?

HMRC R&D tax credits claims since the schemes began


Patent Box highlights – what the stats tell us

If we consider R&D tax credits as a success with sustained growth then perhaps the same can’t be said in the take up of tax relief under Patent Box.

SMEs are receiving a tiny percentage of the value of the Patent Box scheme. The stand out statistic is that 90% of tax relief is claimed by large companies. We can see innovation as a continuum starting with R&D, which leads to IP creation and patents, finally culminating in a Patent Box claim. So why do SMEs get lost along the way? We should be seeing many of the companies claiming R&D tax relief go on to claim under the Patent Box scheme.

There is a greater emphasis on manufacturing which is the biggest claiming sector. But again the north south divide is exemplified with the greatest number of claims in London and the least in the north east.

Patent Box claims since the scheme began


Why are SMEs claiming R&D tax relief but not Patent Box?

Here at GovGrant, we know our SME clients are innovating every day, resulting in significant rewards under the R&D tax relief scheme. Unfortunately we don’t see those same companies capturing and commercialising that innovation with an IP strategy or through a patent. The barriers could be:

  • Lack of awareness of the Patent Box scheme
  • Misunderstanding the mechanics of the scheme
  • Perceived complexity of legal process to create a patent
  • High cost upfront with no certainty of success
  • Belief that patents are about protection not value creation
  • Lack of awareness amongst accountants and advisors

Value claimed through R&D schemes

in the tax year 2018-19 so far

Value claimed through Patent Box

in the tax year 2018-19 so far

R&D is a good indicator of a company’s potential for a Patent Box claim – it’s a conversation that every R&D tax relief claimant should be having.

The new cap on the SME R&D tax credit scheme

Further to our blog outlining the impacts of the Finance Bill 2021 we have received an update to the guidance on the new SME cap from HMRC.

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Finance Bill 2021 – impact on R&D tax credits

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