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  • Businesses projected to claim £7.4bn support in 2019/20 period, driving innovation
  • Information & Communication industry makes up the most claims during 2019/20, increasing 22% in number of claims from 2018/19
  • 76,225 SMEs estimated to submit claims for the 2019/20 period, up from 53,910 during 2017/18 period

London, 20th October: The number of SMEs claiming R&D Tax Relief has increased by over 40% in the two years between 2017/18 and 2019/20, with SMEs undergoing an innovation boom as they make the most out of R&D tax relief schemes which drive innovation in the UK.

Leyton, the UK’s leading innovation funding consultancy, on review of HMRC stats found that the greatest number of sector-specific claims came from those in the Information & Communication industry, which includes software, app development and telecommunications companies. This sector saw the most claims during 2019/2020 at 19,000, showing the biggest sector-specific increase from the previous year, up 22% from 15,050 in 2018/19.

Though the data does not cite a cause for the increase in claims, SMEs across industries are increasingly incorporating technology into their operations to prepare for a high-tech future, such integrating automated processes, Artificial Intelligence (AI), and machine learning. The increase in R&D tax relief credit is helping SMEs to invest in innovation, and to incorporate technology-focused solutions for their business.

The data shows a steady but consistent increase in the number of claimants has continued since the scheme was introduced two decades ago. It is estimated that a total of 76,225 small and medium enterprises (SMEs) will submit claims for the 2019/20 period, compared to 53,910 during 2017/18 and 65,480 in 2018/19, with £7.4 billion of support projected to be claimed in the 2019/20 period.

Whilst there has been a significant increase to the number of claims in technology-driven sectors, growing sectors are still to take full advantage of the R&D Tax Relief scheme. The new figures show that the top three fastest-growing industries in the UK, in terms of the number of companies, made up only 8% of all claims in 2019/20. These were construction (7.0%), Transport & Storage (1.0%), and Electricity, Gas, Stream and Air Conditioning (0.3%).

The data also shows a regional disparity, with London as the top region in terms of claims (20% of the 85,900 total) and the region benefitting most from the scheme (an average of £88,000 per claim.) Conversely, regions in the North and North East have benefitted less, with Yorkshire and the Humberside being the region to have benefitted the least (£38,000 average per claim).

Martin Sharkey, Head of Consulting, Leyton UK said: ‘2021 is turning out to be a big year for UK innovation, and HMRC’s recent figures are a clear indication that UK SMEs are making the most of well-established government schemes which can help to drive innovation. Schemes like this can help businesses invest in technology to help prepare for a high-tech future and investing overhauling old systems, increasing productivity and efficiency. The figures show that there is still a clear regional disparity across regions, and growing sectors are yet to fully make the most of these schemes. There is undoubtedly more to come from companies in growing markets where the idea of R&D has not yet been full considered.’