R&D tax relief rises as claim numbers fall

Businesses preparing their next R&D tax claim should check whether last year’s approach still fits. Changes to the reliefs mean previous assumptions about qualifying costs and the expected benefit may need revisiting.

HMRC’s September 2026 statistics show why the headline figures need careful reading. Provisional estimates for accounting periods ending in 2024/25 show £8.2 billion of R&D tax relief claimed, up 5% on the previous year. Yet claim numbers fell by 17% to 40,325. Among small and medium-sized enterprises (SMEs), claims across all schemes fell by 19%.

A year of transition

The release is the first to include merged R&D expenditure credit, known as RDEC, and enhanced R&D intensive support, or ERIS. These replaced the previous schemes for accounting periods beginning on or after 1 April 2024. The figures therefore include claims under both the old and new arrangements.

Some SMEs now claim through merged RDEC rather than the previous SME scheme. A fall in the old scheme’s figures should therefore not be read as an equivalent reduction in support for smaller businesses. HMRC cautions against directly comparing SME figures under the old and new schemes.

There is nevertheless a wider decline in SME claims. Alongside the 19% fall in claim numbers, qualifying R&D expenditure included in SME claims decreased by 3%. This measures expenditure claimed for tax purposes, rather than research activity across smaller businesses as a whole.

What does this mean for your next claim?

The average claim value increased by 27%, driven by larger claims. Just 6% of claims accounted for 69% of the total relief claimed. These national figures offer little guidance on what an individual business should expect to receive.

Our advice is to build that estimate from current projects, expenditure and the company’s tax position. Assuming the same proportion of expenditure will be recovered as in an earlier claim risks overlooking changes in both the rules and the work.

Sam Swansborough, R&D Tax Director, comments: “Before putting an R&D tax credit into the budget, check that the assumptions still hold. Has the work changed? Are you commissioning research or doing it for a customer? Reviewing those questions early gives the finance team a better basis for forecasting the benefit.”

Most companies now claim through merged RDEC, while ERIS provides support for qualifying loss-making, R&D-intensive SMEs. Establishing which scheme applies is the starting point for assessing the benefit.

Businesses should also review work undertaken for customers or commissioned from other organisations. The release highlights changes to entitlement for contracted-out R&D under merged RDEC, so previous treatment should not simply be carried forward.

Discussing these arrangements while projects and contracts are being planned gives the business an opportunity to understand the potential tax treatment before including relief in its forecasts.

Keep evidence close to the work

HMRC believes the continuing impact of the mandatory additional information form is a key driver of falling claim numbers. The statistics do not establish why any particular business has stopped claiming, or whether it would still qualify.

We recommend involving technical and finance teams early. Record the scientific or technological uncertainties as the work progresses, and connect the explanation to the costs included in the claim. This reduces reliance on reconstructing events after the year end.

For continuing projects, explain what happened during the period being claimed and how the work developed from previous years.

Review your next claim early

The latest figures are provisional and cover accounting periods ending in 2024/25. They provide useful context, but cannot determine what your business can claim today.

An early review of your projects and costs gives you time to resolve questions before filing and a firmer basis for budgeting the expected benefit.

To discuss your next R&D tax claim, contact Sam Swansborough or your usual James Cowper Kreston adviser.

Source: HMRC, Research and Development Tax Credits Statistics, September 2026