released: research and development 10 october 2019 tax credits statistics … · 2019-10-08 ·...

Coverage: United Kingdom Theme: The Economy Released: 10 October 2019 Next release: Autumn 2020 Frequency of release: Annual Media contact: HMRC Press Office (Business) 03000 585028 Out-of-hours: 07860 359544 Statistical contacts: Will Jones Dominica Parry [email protected] KAI Direct Business Taxes Room 3/60 HM Revenue & Customs 100 Parliament Street London SW1A 2BQ Website: https://www.gov.uk/government/collections/corporate-tax-research-and-development-tax-credits

Research and Development Tax Credits Statistics

October 2019

mailto:[email protected]

https://www.gov.uk/government/collections/corporate-tax-research-and-development-tax-credits



Contents Section 1: Key points and summary ................................................................................... 3

1.1 Key Points .................................................................................................................... 3

Section 2: Introduction ..................................................................................................... 4

2.1 About these statistics .................................................................................................. 4

2.2 What are Research and Development (R&D) tax credits? .......................................... 4

2.3 What do the tables contain? ....................................................................................... 5

Section 3: Commentary ..................................................................................................... 6

3.1 Number of claims ........................................................................................................ 6

3.2 Companies with more than one claim in a year ......................................................... 7

3.3 Type of relief claimed .................................................................................................. 7

3.4 Amount of relief claimed ............................................................................................. 7

3.5 R&D expenditure ......................................................................................................... 9

3.6 SMEs claiming in large company or RDEC scheme ................................................... 10

3.7 Vaccines Research Relief (VRR) ................................................................................. 10

3.8 Registered office location ......................................................................................... 11

3.9 Industry sector analysis ............................................................................................. 12

3.10 Cost band analysis ................................................................................................... 13

3.11 Age of Company ...................................................................................................... 13

3.12 First time applications ............................................................................................. 14

3.13 Business Enterprise Research and Development (BERD) survey estimates of R&D expenditure ..................................................................................................................... 15

Section 4: Background Information ................................................................................. 18

4.1 What are Research and Development (R&D) tax credits? ........................................ 18

4.2 Data sources .............................................................................................................. 19

4.3 Methodology ............................................................................................................. 20

4.4 Limitations and reliability of the estimates............................................................... 20

4.5 Rounding and totals .................................................................................................. 22

4.6 Financial years, accounting periods and receipt of tax ............................................. 22

4.7 Revisions to previously published tables .................................................................. 22

4.8 Tables RD4 to RD8 ..................................................................................................... 23

4.9 Planned developments .............................................................................................. 24

4.10 Who might be interested? ...................................................................................... 24

4.11 User engagement .................................................................................................... 25

4.12 Other statistics on R&D in the United Kingdom ..................................................... 25

4.13 National Statistics .................................................................................................... 25

4.14 Contact points ......................................................................................................... 26

Annex A: Statistical Reference Tables – RD1 to RD8 ......................................................... 27

3

Section 1: Key points and summary

1.1 Key Points

So far there have been 48,635 R&D tax credit claims for 2017-18, of which 42,075 are in the SME R&D scheme. This is based on partial data for the year and expected to increase as more returns are received.

So far £4.3bn of R&D tax relief support has been claimed for 2017-18, corresponding to £31.3bn of R&D expenditure.

Due to the nature of the scheme, returns for the latest financial year reported (2017-18) can still be submitted past the cut-off date for the publication. As a result data for 2017-18 is not yet complete. To avoid misleading comparisons between years we have compared the years 2016-17 to 2015-16 in the publication when discussing change between years, and 2017-18 when discussing in-year characteristics.

In 2016-17 the total number of claims for R&D tax credits rose to 52,335, an increase of 20% from 2015-16. The increase was primarily driven by a rise in the number of SME claims, which totalled 45,045 in 2016-17, an increase of 22% from 2015-16.

The total amount of R&D support claimed increased to £4.4bn in 2016-17, an increase of 14% from the previous year.

The total value of R&D expenditure against which claims were made was £32.8bn in 2016-17, an increase of 4% from the previous year.

R&D claims are concentrated in companies with a registered office in London, the South East or the East of England (46% of all claims and 61% of the total amount claimed for 2017-18). However, the regional split is based on the registered head office location so may not be where all of the R&D activity takes place.

The ‘Manufacturing’, ‘Professional, Scientific and Technical’, and ‘Information and Communication’ sectors continued to have the greatest volume of claims, making up a total of 68% of claims and 73% of the total amount claimed for 2017-18.

Between 2000-01, when the R&D tax credit schemes were launched, and 2017-18, over 300,000 claims have been made and £26.9bn in tax relief claimed.

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Section 2: Introduction

2.1 About these statistics

This publication provides information on the number of companies claiming Research and Development (R&D) tax credits and the cost to the Exchequer of providing that support. The statistics are compiled using claims made for tax credits which are reported on the Corporation Tax (CT) return form CT600. The CT600 form shows the enhanced amount of R&D expenditure and the amount of any R&D payable tax credit. Companies also state under which scheme they are claiming for the Small and Medium Enterprise (SME) and large company schemes. The figures are for 2000-01 to 2017-18 and are based on returns received on or before 30 June 2019. The filing deadline for CT returns is one year from the end of the accounting period. The filing deadline for accounting periods ending in 2017-18 was 31 March 2019, and the extra 3 months allows for the processing of returns. R&D tax relief claims may be submitted up to one year after the filing deadline, therefore the 2017-18 statistics presented here will be subject to revision in next year’s publication. As well as new statistics for 2017-18, this release includes revisions to 2014-15, 2015-16 and 2016-17 as a result of receiving additional returns and changing the data source used to produce the statistics. Further explanation on these changes are provided in the background notes. The number of claims is higher than the number of companies making claims. This is because a company can make more than one claim in the same year, either because they claim under different schemes or because a company with more than one accounting period ending in a single financial year will submit a return for each accounting period ending in that year.

2.2 What are Research and Development (R&D) tax credits?

R&D tax credits are a tax relief designed to encourage greater R&D spending, leading in turn to greater investment in innovation. They work by either reducing a company’s liability to corporation tax or by making a payment to the company. This publication includes the statistics relating to three schemes for claiming relief: The Small or Medium-sized Enterprise (SME) Scheme; The Large Company Scheme; and Research and Development Expenditure Credits (RDEC). A SME may claim a higher rate of relief than a large company. Also, a SME which has no tax bill to reduce may claim a cash payment instead. R&D tax credits were introduced for SMEs in 2000 and extended to large companies from 2002. An additional “top-up” relief for vaccines research was introduced in 2003 – known as Vaccines Research Relief (VRR)1.

1 VRR for SMEs has been removed for expenditure incurred on or after 1 April 2012, but was still available to large companies for expenditure up to 31st March 2017.

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The Research and Development Expenditure Credit (RDEC) scheme (also known as ‘Above-the-Line’) was introduced in April 2013 for large companies. Companies could choose the new RDEC scheme or the large company scheme in respect of expenditure incurred between April 2013 and the end of March 2016, after which time the large company scheme was no longer available. A company with no tax liability that claims the expenditure credit may now receive a cash payment. In some circumstances companies may have incurred expenditure before 1 April 2016 but make claims under the large company scheme after 1 April 2016. Further information on the schemes is included in the Background Information section of this publication.

2.3 What do the tables contain?

Table RD1 shows how many R&D tax credit claims have been made under each scheme since 2000. Tables RD2 and RD3 show the cost to the Exchequer (on an accounting period and receipts basis, respectively – see explanation in the Financial years section below) of meeting the claims shown in table RD1. Table RD4 shows how much qualifying R&D expenditure has been used to make the R&D tax credit claims shown in table RD1. Table RD5 provides a registered office regional analysis of R&D tax credit claims for 2016-17 and 2017-18. Table RD6 provides an industry sector analysis of R&D tax credit claims for 2016-17 and 2017-18. Table RD7 provides a claim size analysis of R&D tax credit claims for 2016-17 and 2017-18. Table RD8 provides an analysis of first time applicants for SME and large companies. We intend to publish supplementary tables in due course, including more detailed breakdowns of R&D tax credit claims by:

County / unitary authority

Region and industrial sector

Claim size by region

Claim size by sector

6

Section 3: Commentary

3.1 Number of claims

The total number of claims for R&D tax credits for 2016-17 was 52,335, an increase of 20% from 2015-16. (See table RD1). The number of SME claims rose by 22% to 45,045, while the total number of claims for the large company and RDEC schemes increased by 12% to 7,285. So far there have been 48,635 claims for 2017-18, of which 42,075 are in the SME scheme and 6,555 in the RDEC scheme. These numbers are expected to increase as more returns are received. Figure 1 shows the number of claims under each scheme in each financial year (data from Table RD1). The 2017-18 data has been shaded to indicate these figures are based on partial data and expected to increase as more returns are received. Figure 1: Number of claims received for R&D tax credits by scheme, 2000-01 to 2017-18

0

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SME Large company RDEC SME in Large Company or RDEC scheme

The increase in the number of SME claims in recent years is likely to reflect the effect of changes made to the SME scheme from April 2012 onwards. The removal of the requirement for a minimum R&D expenditure of £10,000 has meant that more companies are eligible to apply for the relief. In the same year the PAYE cap was removed, opening up the scheme to more users. There have also been increases in the SME enhanced expenditure rate, including a rise from 125% to 130% in 2015-16. These changes, together with an increase in the SME payable tax credit rate from 11% in 2012-13 to 14.5% in 2014-15, have made the scheme more attractive.

Estimated 13,000 claims impact of data revisions in 2014-15

7

For large companies, the number of RDEC claims rose by 12% in 2016-17 as companies continued to switch over from the large company scheme. RDEC has now replaced the large company scheme with effect from 1 April 2016. Due to the very small number of claims still received, large company claims from 2016-17 onwards are included in RDEC totals. Figure 1 shows a particularly large increase in the number of claims between 2013-14 and 2014-15. However, this is mainly because of the revisions to 2014-15 as a result of additional claims being identified and incorporated into the statistics in the September 2018 publication. Years prior to 2014-15 have not been revised.

3.2 Companies with more than one claim in a year

In some cases, a single tax return has more than one claim. For example, a small or medium-sized company may claim under the SME scheme and also as a subcontractor under the large company or RDEC scheme. A large company could claim under the large company scheme, and separately for vaccines research relief, on the same return.

A company with more than one accounting period ending in a single financial year will submit a return for each accounting period ending in that year. This means that the total number of returns submitted is greater than the total number of companies.

For 2016-17, a total of 50,455 companies submitted 52,105 returns with 52,335 relief claims (see table RD1). So far for 2017-18 a total of 47,050 companies have submitted 48,505 returns with 48,635 relief claims but this is expected to increase as more claims are received.

3.3 Type of relief claimed

The most common way for SMEs to claim R&D tax credits is by a deduction from corporation tax (CT) liability, with 23,640 claims made this way so far for 2017-18, compared to 7,600 claims made for a payable credit. Payable credits are claimed by loss-making companies which have no CT liability against which to set the deduction. The rate for payable tax credit claims increased to 14.5% of enhanced expenditure in 2014-15. This is likely to be one of the drivers behind the continuing strong growth in the number of payable credit claims.

In some cases, a SME can first use its R&D tax credit to reduce its tax bill to zero, and then take the rest as a cash payment. In other cases, a SME with no tax bill might choose to take some or none of its R&D tax credit as cash, with the remainder being carried forward. All such cases are referred to as “combination claims”. There have been 10,835 combination claims made so far for 2017-18.

3.4 Amount of relief claimed

Although the volume of claims under the SME scheme is much larger than under the large company and RDEC schemes, a similar proportion of the relief by value is claimed by large companies. This is because the amounts they claim are generally much larger than those claimed by SMEs.

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The amounts of support claimed are shown in Figure 2 below (data from table RD2). Almost £4.4bn of support was claimed for 2016-17, an increase of 14% from 2015-16. So far just over £4.3bn in support has been claimed for 2017-18, of which £2.3bn has been claimed through the SME scheme and £1.8bn by large companies under the RDEC scheme. £225m has been claimed by small and medium sized companies, including subcontractors, through the RDEC scheme. The total cost for 2017-18 is expected to rise as more claims are received and processed by HMRC. Based on the timings of claims received in previous years, we estimate that the final cost for 2017-18 will be £4,950m.

The cost of support has increased substantially since 2012-13. This is in part due to additional claims being included from 2014-15 onwards, but also part of a trend of increased costs of the schemes as rates are made more favourable. The increase in the rate of enhanced expenditure for SMEs from 100% to 125% in 2012-13 and then to 130% in 2015-16, and the increase in the payable credit rate from 11% in 2013-14 to 14.5% in 2014-15, have all contributed to the increase in the value of support claimed by SMEs.

The total amount of support claimed by large companies has also increased, as companies have moved from the large company scheme to the RDEC scheme which has a higher rate of support. RDEC support to large companies rose by 5% from 2015-16 to 2016-17. RDEC has now replaced the large company scheme with effect from 1 April 2016.

Figure 2: Total support claimed through R&D tax credits by scheme, 2000-01 to 2017-18 (£ million, accounting period end date basis)

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* represents estimated value after all claims have been processed.

Estimated £580m impact of data revisions in 2014-15

9

Figure 2 and table RD2 show the amount of relief claimed based on the year of the company’s accounting period end date (also known as accruals basis). The 2017-18 data has been shaded to indicate these figures are based on partial data and expected to increase as more returns are received. Figure 2 shows a particularly large increase in the cost of claims from 2013-14 to 2014-15. This can be largely explained by the increase in R&D expenditure being used to claim under the RDEC scheme (refer to section 3.5), the increase in the SME payable tax credit rate from 11% to 14.5% and the revisions to 2014-15 figures from additional claims being included in those years. Table RD3 in Annex A shows the amount of relief based on the year when the money was paid out or deducted by HMRC (receipts basis).

3.5 R&D expenditure

Figure 3 (data from table RD4) shows the total qualifying expenditure on R&D which has been used to claim R&D tax relief. This does not represent all expenditure on R&D in the UK, just that which qualifies for R&D tax relief and has been used to make a claim. Section 3.13 provides a comparison between the tax relief data and the Business Enterprise Research and Development (BERD) survey of R&D expenditure carried out by the Office for National Statistics.

The level of R&D expenditure used to claim R&D tax relief was £32.8bn in 2016-17, an increase of 4% from 2015-16. The majority of this expenditure (76%) was by companies claiming under the large company and RDEC scheme. SME expenditure made up only 24% of the total but showed strong growth year-on-year. So far in 2017-18, £31.3bn in expenditure has been used to claim R&D tax relief, with an increase expected as more returns are received.

R&D expenditure used to claim R&D tax relief has generally been on a rising trend. Figure 3 shows that there was a particularly sharp increase between 2013-14 and 2014-15. This can partly be explained by an increase of around £2bn in R&D expenditure by universities and similar institutions, predominantly under the RDEC scheme. It is also partly explained by the revisions to 2014-15 figures made in the September 2018 publication from additional claims being included. The 2017-18 data has been shaded to indicate these figures are based on partial data and expected to increase as more returns are received.

Note that expenditure incurred on or after 1 August 2015 by universities and charities is no longer eligible for the RDEC scheme. There were also new rules restricting claims for consumable items which apply to expenditure incurred on or after 1 April 2015.

10

Figure 3: Total R&D expenditure used to claim R&D tax credits by scheme, 2000-01 to 2017-18 (£ million, accounting period end date basis)

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SME Large company RDEC SME in Large Company or RDEC scheme

3.6 SMEs claiming in large company or RDEC scheme

SMEs working for large companies as sub-contractors or receiving related subsidies are not able to claim under the SME scheme but may be able to claim under the large company or RDEC scheme. The number of these claims has risen substantially in recent years. Due to the way the data is recorded, it is not currently possible through CT returns to fully distinguish between SMEs claiming under the large company scheme and those claiming under the RDEC scheme. However, since April 2016 claims can only be made under the RDEC scheme meaning there will be very few large company scheme claims after this date. In 2016-17, SMEs received £205m in support from either the RDEC or Large company scheme. So far in 2017-18, SMEs have received £225m in support from 3,485 claims in the RDEC scheme, with an increase expected as more returns are received.

3.7 Vaccines Research Relief (VRR)

Previously, loss-making SMEs could surrender enhanced VRR deductions for a cash payment, like the SME R&D tax credit. However, VRR for SMEs was reduced to 20% of qualifying expenditure from 1st April 2011 and was then removed for expenditure incurred on or after 1st April 2012. Large companies claiming VRR can only use the deduction option; they cannot claim payable credits for VRR.

Estimated £4.7bn impact of data revisions in 2014-15

11

The number of claims under the VRR scheme remained at about 10 a year following its introduction in 2003-04 (see table RD1) but has fallen below 10 in recent years. This represents a very small cost to the Exchequer, with support claimed of less than £5m each year (not shown in Figure 2, due to its small size). Expenditure used to claim under the VRR scheme (data from table RD4) was on average around £20m per year in the period up to 2012-13. As the number of companies in the scheme has fallen, expenditure data is not shown from 2013-14 onwards. This is in line with HMRC’s policy on disclosure and taxpayer confidentiality. Note that Vaccines Research Relief is not available on expenditure incurred on or after 1 April 2017.

3.8 Registered office location

Table RD5 shows the distribution of R&D tax credit claims by government office region of the company’s registered address. The numbers and amounts for 2017-18 are shown in Figure 4 below (data from Table RD5).

This shows a concentration of companies with registered offices in London (20% of claims and 29% of total claimed), the South East (16% of claims and 19% of total claimed) and the East of England (10% of claims and 13% of total claimed).

Table RD5 should be interpreted with caution because the regional split is based on registered office location, which may not be where the actual R&D activity is carried out– see section on tables RD4–RD6 in the Background Information chapter below. Figure 4: Registered office regional analysis of R&D tax credit claims, 2017-18

0 200 400 600 800 1,000 1,200 1,400

0 2,000 4,000 6,000 8,000 10,000 12,000

Channel Islands / Isle of Man

Northern Ireland

Scotland

Wales

South West

South East

London

East of England

West Midlands

East Midlands

Yorkshire and The Humber

North West

North East

Amount claimed (£m)

Number of claims

Number of claims Amount claimed

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3.9 Industry sector analysis

Table RD6 and Figure 5 show the distribution of R&D tax credit claims by industry sector for 2017-18. There is a concentration in the number of claims in the 'Manufacturing' (25%), 'Information and Communication' (24%) sectors and 'Professional, Scientific and Technical' (20%), accounting for 29%, 19% and 24% of the total amount claimed, respectively. Figure 5: Industry Sector analysis of R&D tax credit claims, 2017-18

0 200 400 600 800 1,000 1,200 1,400

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

S. Other services activities

R. Arts, Entertainment & Recreation

Q. Health & Social Work

P. Education

O. Public Admin, Defence & Social Services

N. Admin & Support Services

M. Professional, Scientific & Technical

L. Real Estate

K. Financial & Insurance

J. Information & Communication

I. Accommodation & Food

H. Transport & Storage

G. Wholesale & Retail Trade, Repairs

F. Construction

E. Water, Sewerage and Waste,

D. Electricity, Gas, Steam and Air Conditioning

C. Manufacturing

B. Mining & Quarrying

A. Agriculture, Forestry, Fishing


Number of claims

Number of claims Amount claimed

The coding of industry sectors does not always reliably describe the sector of companies’ R&D activity for a variety of reasons – as described in the Tables RD4-RD6 part of the Background information section below. Caution should therefore be exercised in interpreting this chart.

13

3.10 Cost band analysis

Table RD7 and Figure 6 show the distribution of R&D tax credit claims by cost band for 2017-18. While returns are still being received for the financial year, enough returns have been submitted to provide a useful comparison over cost bands. There is a concentration in the number of claims in the lower bands (74% in cost bands up to £50k), which corresponds to the growth in the SME scheme seen in recent years. The largest concentration in amount claimed is in the ‘Over £2m’ band (34%), corresponding to R&D claims made by the largest companies. Figure 6: Cost band analysis of R&D tax credit claims, 2017-18

0 200 400 600 800 1,000 1,200 1,400 1,600

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000

Up to £5k

£5k to £10k

£10k to £15k

£15k to £20k

£20k to £25k

£25k to £30k

£30k to £40k

£40k to £50k

£50k to £100k

£100k to £250k

£250k to £500k

£500k to £1m

£1m to £2m

Over £2m


Number of claims

Number of Claims Amount Claimed

3.11 Age of Company

Figure 7 shows the distribution of R&D tax credit claims by age of the companies registered with Companies House for 2017-18 returns. While returns are still being received for the financial year, enough returns have been submitted to provide a useful comparison over company age. The largest number of claims came from companies between 5-10 years old (24%).

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Figure 7: Age of Company analysis of R&D tax credit claims, 2017-18

17%

24%

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3.12 First time applications

The number of first time applicants in the SME scheme has increased from 10,540 in 2015-16 to 12,120 in 2016-17, a 15% increase. The increases in enhanced expenditure rates and payable tax credit rates in recent years have made the SME scheme more generous and therefore more attractive to potential applicants, and there is also greater awareness of the scheme.

The introduction of the RDEC scheme in 2013-14 resulted in an increase in first time applicants from large companies. Since then growth has levelled off with 1,750 new applicants in 2016-17, which is similar to the number in 2015-16.

The requirement for a minimum expenditure of £10,000 on R&D was removed on 1st April 2012. This will have had a small effect on the number of first time applicants claiming R&D tax relief, particularly for SMEs.

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Figure 8: Number of first time applications by financial year, 2000-01 to 2017-18

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Table RD8 and figure 8 show the number of first time SME and large company applicants for each year. The increase from 2013-14 to 2014-15 is partly explained by improved data sourcing, this is indicated by a dashed line in the chart. The trend to 2017-18 is also represented by a dashed line to indicate these figures are based on partial data and expected to increase as more returns are received.

3.13 Business Enterprise Research and Development (BERD) survey estimates of R&D expenditure

The Office for National Statistics (ONS) conducts the annual Business Enterprise Research and Development (BERD) survey of approximately 5,500 businesses engaged in R&D (4,000 in Great Britain and 1,500 in Northern Ireland)2. Table 1 shows the latest BERD survey estimates of R&D revenue expenditure by businesses, and the expenditure used to claim R&D tax credits from HMRC administrative data3. The BERD figure for 2016 of £22.6bn compares with HMRC’s claims-related expenditure figure of £32.3bn for 2016-17. Note that BERD data is reported on a calendar year basis, whereas

2 See Business Enterprise Research and Development, Quality and methodology information:

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/researchanddevelopmentexpenditure/method

ologies/ukbusinessenterpriseresearchanddevelopmentsurveyqmi

3 See the dataset for Figure 1 of BERD 2017:

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/researchanddevelopmentexpenditure/bulletin

s/businessenterpriseresearchanddevelopment/2017

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/researchanddevelopmentexpenditure/methodologies/ukbusinessenterpriseresearchanddevelopmentsurveyqmi

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/researchanddevelopmentexpenditure/methodologies/ukbusinessenterpriseresearchanddevelopmentsurveyqmi

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/researchanddevelopmentexpenditure/bulletins/businessenterpriseresearchanddevelopment/2017

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R&D tax credit claims are reported by financial year. For comparing data, the 2016 calendar year is most closely related to the 2016-17 financial year. To improve the comparability of the estimates, we have removed the value of expenditure for universities and similar institutions from the analysis of our tax relief statistics.

Table 1: UK R&D expenditure 2005 to 2017 (£ billion)

Year of Comparison

Total R&D expenditure (BERD survey)

R&D expenditure used to claim tax

credits (HMRC data)

Ratio of HMRC expenditure to BERD

expenditure

2005 and 2005-06 13.7 7.2 53%

2006 and 2006-07 14.1 7.8 56%

2007 and 2007-08 15.7 9.0 57%

2008 and 2008-09 15.8 10.9 69%

2009 and 2009-10 15.5 10.3 66%

2010 and 2010-11 16 11.0 69%

2011 and 2011-12 17.5 12.0 69%

2012 and 2012-13 17.4 13.3 77%

2013 and 2013-14 18.6 15.2 82%

2014 and 2014-15 20 24.4 122%

2015 and 2015-16 21 28.4 135%

2016 and 2016-17 22.6 32.3 143%

2017 and 2017-18 23.7 30.7 -

Both BERD and HMRC recorded expenditures have followed upward trends except for 2009 when they both decreased slightly, in 2012 when the BERD expenditure dipped slightly while the HMRC expenditure increased. While data for the 2017 BERD survey is complete, showing growth to £23.7bn of expenditure, returns are still being received for 2017-18 HMRC data and so a comparison cannot yet be made. The ratio of total R&D expenditure used to claim tax credits to total R&D expenditure as measured in BERD has increased from 53% in 2005 to 143% in 2016, rising sharply from 2012 onwards. The increase will be in part due to the data from 2014-15 onwards being more complete than earlier years due to the inclusion of additional returns in the statistics. It is likely that greater awareness and the increasing generosity of the schemes has led to a larger proportion of those companies carrying out R&D activity going on to make a claim. The rise in the ratio from 2013-14 onwards is also likely to reflect an increase in large companies claiming R&D tax relief following the introduction of the RDEC scheme. Some of the increase in the ratio may be a reflection of those SMEs who previously carried out R&D activity but could not claim due to the £10,000 minimum expenditure now claiming under the scheme. This threshold was removed in 2012 and is most likely to affect growth in the years following its removal.

17

Figure 9 shows a comparison of HMRC’s tax relief statistics with BERD expenditure. However, it is important to note that there are differences between HMRC and BERD in the way that R&D expenditure is measured and potential data coverage differences, so this comparison should be treated with caution. For example, overseas expenditure is not counted by BERD but may qualify for R&D tax credits. These figures do not therefore imply that the take-up rate for the HMRC R&D tax relief schemes is 143% of that reported in the BERD survey, but they do suggest a significant increase in take-up since 2012-13. The trend to 2017-18 is represented by a dashed line to indicate these figures are based on partial data and expected to increase as more returns are received. The trend from 2013-14 to 2014-15 is represented by a dashed line to indicate changes due to data revisions made in the September 2018 publication. Figure 9: HMRC and BERD estimates of R&D expenditure, 2006-07 to 2017-18

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Section 4: Background Information

4.1 What are Research and Development (R&D) tax credits?

R&D tax credits are a tax relief designed to encourage greater R&D spending, leading in turn to greater investment in innovation. They work by reducing a company's tax bill by an amount equal to a percentage of the company’s qualifying R&D expenditure or by the payment of a credit, again linked to the company’s qualifying R&D expenditure. A company can only claim R&D tax credits if it is liable for Corporation Tax. There are two schemes for claiming relief:

The Small or Medium-sized Enterprise (SME) Scheme; Research and Development Expenditure Credits (RDEC).

The RDEC scheme (also known as ‘Above-the-Line’) was introduced in April 2013 for large companies. Companies could choose the RDEC scheme or the old Large Company scheme until April 2016, after which the Large Company scheme was no longer available. A company with no tax liability that claims the expenditure credit may now receive a cash payment. Under the normal EU definition, a SME is a company or organisation with fewer than 250 employees and either of the following:

an annual turnover not exceeding €50 million; a balance sheet not exceeding €43 million.

This definition was used in deciding eligibility for R&D tax credits until 1 August 2008. Since then, a wider definition of SME has been used – but only in the context of R&D tax credits. This new definition, still in force, states: “A SME is a company or organisation with fewer than 500 employees and either of the following:

an annual turnover not exceeding €100 million; a balance sheet not exceeding €86 million.

However, a company may not be considered to be a SME if it is part of a larger enterprise that, taken as a whole, would fail these tests. A SME may claim a higher rate of relief than a large company. Also, a SME which has no tax bill to reduce may claim a cash payment instead. R&D tax credits were introduced for SMEs in 2000 and extended to large companies from 2002. An additional “top-up” relief for vaccines research was introduced in 2003 – known as Vaccines Research Relief - VRR4.

4 VRR for SMEs has been removed for expenditure incurred on or after 1 April 2012, but was still available to large companies for expenditure up to 31st March 2017.

19

Both corporation tax and R&D tax credit rates have changed over the years. For information about current and historical rates of deduction and payable credits, and who can claim them (including sub-contractors), please see https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief.

4.2 Data sources

The main administrative data used to compile National Statistics on R&D tax credits are derived from information provided by companies on the Company Tax return (CT600), with modifications or additions made in subsequent amended returns and assessments. The data cover all CT returns received by HMRC and records are available for all SME and large company claims made in those returns. The CT return collects information on the enhanced level of R&D expenditure and the amount of any R&D payable tax credit. Companies also specify whether they are claiming under the SME or large company scheme, and declare the expenditure they are claiming under the SME sub-contractor or vaccines research relief scheme, if applicable. The CT600 form contains a step-by-step record of the company’s corporation tax calculations, starting with its income and chargeable gains, and taking into account any relevant deductions and reliefs. Initial checks carried out on the data include:

Correction of calculation errors in the tax return; Automated checks which take place when loading data into the analysis database.

Inconsistencies are automatically ‘repaired’ if possible; otherwise the record is flagged as invalid.

Once the claims data have been extracted from the analysis database:

Outliers are identified and their veracity checked – records are then removed or

corrected appropriately; Any large changes in figures from one statistical release to the next are investigated.

Tables RD1 to RD4 relate to claims made in CT returns for the SME, large company and RDEC schemes, and vaccines research relief. The figures cover the period 2000-01 to 2017-18 and are based on CT returns received on or before 30 June 2019. Because a company can sometimes claim under more than one scheme in any one accounting period, and can have more than one accounting period ending during any one financial year, the number of companies making claims in any one year is less than the number of claims in that year. Table RD1 provides the number of companies claiming R&D tax credits by financial year, and the number of tax returns in which they make those claims.

https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief

https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief

20

Postcode and industry sector data for companies claiming R&D tax credits are obtained from the Office for National Statistics’ (ONS) Inter-Departmental Business Register (IDBR) and from Companies House. These data extracts are combined with CT return data to produce Tables RD5 and RD6. Because all the necessary data for the R&D Tax Credits National Statistics are obtained from administrative data sources, there is no additional burden on companies or HMRC tax inspectors to provide information.

4.3 Methodology

The R&D tax credit tables include every case captured via a CT600 form. As no sampling is necessary, sampling error is not an issue. Each claim is classified (e.g. as a SME payable credit, Large company, SME applying in the Large Company or RDEC scheme, etc.) based on the information provided on the CT600 form and its associated R&D expenditure and tax cost calculated. The numbers, costs and expenditure are then aggregated to produce Tables RD1, RD2 and RD4. Table RD3 is produced by applying standard conversion factors to the figures in Table RD2. In this year’s publication an improved data source has been created from a combination of CT return and CT assessment data, extracted from HMRC’s IT systems for electronic filing (E-filing) and corporation tax (COTAX). In the data source each record represents one claim and contains R&D data fields from the e-filed CT return data set, the COTAX CT return data set and/or the CT assessment data set. Logic is applied to the new data source to determine the best data set to use for each claim. In last year’s publication we identified a data-feed issue whereby details of some CT600 R&D tax credit claims were missing from our analysis database. Where the management information indicated a claim, but was not shown in our analysis database, the data was amended to include this claim. This incorporation of new data resulted in the changes described in earlier sections for years 2014-15 onwards. In this year’s publication we have used the improved data source described above instead of the management information to identify the claims but have continued to use management information for quality assurance purposes and to assist with classifying claims. This has been used for all years from 2014-15 but earlier years continue to have missing claims. We plan to provide a revision to the historical time series in a subsequent publication.

4.4 Limitations and reliability of the estimates

Although the data are the best available at the time, claims for R&D tax credits can be made up to 2 years after the end of an accounting period (i.e. amendments can be made to returns already submitted within this time period), so some claims may be received after the statistics are released. Figures for earlier years may therefore have changed since a previous release.

21

The statistics are produced based on information provided to HMRC on the CT600 and related forms and they exclude a small number of claims that come in a non-standard format. This release provides information on research and development activities for which R&D tax credits have been claimed. Not all expenditure on R&D in the UK is used to claim the tax credit, so these statistics are not a comprehensive account of all R&D activity in the UK.

The RDEC tax credit scheme was introduced in 2013-14. Large companies claiming RDEC can usually be clearly identified in the CT600 tax return data. Small companies claiming a tax credit may have claimed under RDEC or through the SME scheme. To distinguish these, information is additionally needed that is provided in the supplementary information to the claims. It has therefore been necessary to make certain assumptions in compiling the figure for SMEs applying through the large company or RDEC scheme for 2013-14 onwards. However, this group have historically accounted for only a very small proportion of the support claimed under the large company scheme and this fact has been used in compiling the latest figures. Tables RD5 and RD6 should be interpreted with caution. Table RD5 looks at the regional split of R&D claims. However, this is based on registered office location, which may not be where the actual R&D activity is carried out. Table RD6 provides the industry breakdown of R&D activity. However, this may not reflect the industry in which the R&D activity itself is carried out. For more info, see the note on tables RD4 to RD6 below.

All figures should therefore be considered provisional, although any revisions are more likely to affect the later years. Sources of error in the published statistics include:

Although the majority of returns are submitted before the cut-off date, as explained above, there are a number of returns received after the 30th June which add to the existing data and can therefore result in revisions to previously published figures. Accordingly, the results for all years should be considered as provisional, although any such revisions are more likely to impact on the later years;

Data capture errors: companies may make errors entering their information onto the CT600 Company Tax Return form, whether this is done on paper or electronically. The data are subsequently entered onto the COTAX system either manually or by electronic transmission. This is another point at which data may be altered due to human error or software errors. There is a risk that errors involving very large profits or tax amounts may distort the overall statistics. To mitigate this, checks are carried out and any incorrect large values which are detected are altered in the analysis database before the statistics are produced;

A small number of companies submit claims in a non-standard format and are therefore not included in these statistics; and

Data on company location and industry sector are not necessarily reliable indicators of the R&D being carried out - see explanation of tables RD4 to RD6 below.

22

4.5 Rounding and totals

The figures have been independently rounded to the nearest 10 or £10 million up to 2012-13 and to the nearest 5 or £5 million from 2013-14 onwards. This can lead to components not summing to the totals shown. Also, for table RD1, the total claims provided for individual schemes do not sum to the total returns for all R&D schemes. This is because some sub-contractor and vaccine research relief claims are included on the same return as existing SME or large company claims.

4.6 Financial years, accounting periods and receipt of tax

Despite appearances, tables RD2 and RD3 present slightly different costs. Table RD2 shows costs falling on the Exchequer according to when the company incurred the R&D expenditure, whereas table RD3 shows estimates of the costs according to when tax would have been received, or the payment was made, by HMRC. The financial year in table RD2 is therefore defined by the date at which the company’s accounting period ends. For example, if the end date of the accounting period is 31st January 2006, the claim is said to be for financial year 2005-06 (which ended on 31st March 2006). However, in table RD3, the financial year indicates when the cost is estimated to be incurred by HMRC. So, in the same example, if the claim was paid on 27th April 2006, then that cost will fall in financial year 2006-07. The accruals-receipts conversion factors used in table RD3 are estimated based on the average timescales for returns to be received and processed for each R&D claim type. This year we have refined our modelling of the lags between accruals and receipts to reflect that the lags are longer than previously estimated. This has resulted in downward revisions to most of the figures in table RD3 from 2014-15 onwards.

4.7 Revisions to previously published tables

Companies’ corporation tax assessments are subject to revision, and although the majority of assessments are finalised within two years, there are cases which can take much longer. The cut-off date for receipt of returns has been set to minimize omissions and amendments. There is thus no specific point at which the R&D tax credit claims for a particular year can be considered complete or final, for example, due to late submission of a company’s tax return. Substantial revisions were made in last year’s publication to correct for missing returns. At that time the data was revised back to 2014-15, which means that earlier years may not be complete. The size of the revision was estimated to lead to an additional £550m in claims being included in 2014-15. Further revisions have been made in this publication as a result of the introduction of an improved data source (described in the Methodology section above) and these affect figures for 2014-15 onwards. Revisions due to the improved data source have increased the number of claims by around 1% a year and the cost of the relief by up to 6% per year. These revisions change the basis of the statistics slightly in that some claims that are made but are not yet paid as they are being processed by HMRC are not included in the data. They are not included until the point at which the processing concludes and only then if the claim is paid. These revisions make some relatively small differences to the data as shown in the table below.

23

Numbers: Actual

Amounts: £ million

Comparison between 2018 and 2019 National Statistics Publications

2014-15 2015-16

2018

National

Statistics

2019

National

Statistics Difference

%

Difference

2018

National

Statistics

2019

National

Statistics Difference

%

Difference

No. of Claims 35,145 35,410 265 0.8% 43,040 43,515 475 1.1%

Cost (£m) 2,955 2,985 30 1.0% 3,660 3,860 200 5.5%

Expenditure (£m) 24,820 26,810 1,990 8.0% 28,905 31,460 2,555 8.8% The 2014-15 and 2015-16 statistics were mostly complete in last year’s publication so the differences in the table above show the impact of the introduction of the new data source. The impact is relatively minor compared to the revisions made last year. We have also refined the calculation of R&D expenditure for the RDEC scheme. This is the main reason for the 8% increase of expenditure in 2014-15 between this year’s and last year’s publications. This has also had a smaller impact on the 2015-16 expenditure. Revisions to the published figures are not routinely made until the following year’s release. Typically the largest revisions are to the most recent year’s figures, reflecting claims received after the cut-off date.

4.8 Tables RD4 to RD8

Tables RD4 to RD6 were published for the first time in 2012 in response to user requests and on the recommendation of the United Kingdom Statistics Authority (UKSA). Table RD4 reports the amount of R&D expenditure that gives rise to the tax relief claims, which for some users is a more relevant business measure than the tax cost. Table RD5 analyses claims for 2017-18 by the government office region (GOR) of the registered address of the companies making the claims. A company may operate at different locations throughout the UK but its tax return will be made on behalf of the whole company and linked to its registered office address. A geographical breakdown will therefore show all the company’s expenditure and tax liability as originating at the location of the registered office, which may not reflect the location of the company’s actual R&D activities. Since the publication of the 2010-11 statistics, a regional breakdown of registered office addresses has been provided in Table RD5, subject to the above important caution. Table RD5 is classified as official statistics rather than as National Statistics. Similarly, Table RD6 analyses claims by industry sector based on the SIC classification of the companies. The classification is based on the UK Standard Industrial Classification 2007 standard; prior to the 2014 set of statistics it was based on SIC20035. Companies have been assigned to a SIC 2007 sector based on information from the ONS’s Inter-Departmental

5 Please see the link below to the Office for National Statistics (ONS) which provides further information on

SIC2007 including the correlation between SIC2003 and SIC2007:

http://www.ons.gov.uk/ons/guide-method/classifications/current-standard-classifications/standard-industrial-

classification/index.html

http://www.ons.gov.uk/ons/guide-method/classifications/current-standard-classifications/standard-industrial-classification/index.html

http://www.ons.gov.uk/ons/guide-method/classifications/current-standard-classifications/standard-industrial-classification/index.html

24

Business Register (IDBR) survey where there was a unique match, or otherwise from information provided by companies to Companies House. However, there are a number of caveats to this information for example, a company may have changed its primary business since first registration; or, although it’s primary business is correct (e.g. telecommunications), the company’s current research is in a different sector (e.g. materials science). For companies within a group, the industry sector might be recorded as that of its holding company, and appear under “activities of holding companies” within the Business Services sector. Table RD6 is classified as official statistics rather than as National Statistics.

Table RD7 was published for the first time in 2018 in response to user request and shows the number and value of claims, split by size of claim. Further claim size bands have been added in this year’s publication in response to feedback from users. Table RD7 is classified as official statistics rather than as National Statistics.

Table RD8 was published for the first time in 2018 in response to user request and provides an analysis of first time applicants for SME and large companies. Table RD8 is classified as official statistics rather than as National Statistics.

4.9 Planned developments

In response to user demand we intend to publish supplementary tables in due course, including breakdowns by:

County / unitary authority

Region and industrial sector

Claim size by region

Claim size by sector This will update the supplementary tables published in April and May 2019, bringing them in line with the data in this publication.

In addition we plan to provide a longer back series of revised data in a subsequent publication.

4.10 Who might be interested?

These statistics may be of interest to anyone seeking the latest data about the uptake of R&D tax credits, their cost, and the nature of the companies claiming them. They may also be of interest to organisations such as think-tanks, universities and other similar institutions, e.g. for comparing the relative effects of similar incentives operating in other countries. Such organisations might also be interested in an evaluation of R&D tax credits published on the HMRC web site at: https://www.gov.uk/government/publications/tax-credits-evaluation-of-research-and-development

https://www.gov.uk/government/publications/tax-credits-evaluation-of-research-and-development

https://www.gov.uk/government/publications/tax-credits-evaluation-of-research-and-development

25

4.11 User engagement

We are committed to improving the official statistics we publish. We want to encourage and promote user engagement, so we can improve our statistical outputs. We would welcome any views you have. If you have ideas for improvements, or comments on changes made this year, or any other suggestions relating to this release, please use the statistical contacts named at the end of this section and on the cover page.

4.12 Other statistics on R&D in the United Kingdom

These statistics comprise information on research and development activities for which R&D tax credits have been claimed. Not all expenditure on R&D in the UK is used to claim the tax credit, so these statistics are not a comprehensive account of all R&D activity in the UK. The Office for National Statistics (ONS) publishes several additional National Statistics on R&D in the UK, including the Business Enterprise Research and Development (BERD) survey and Gross Domestic Expenditure on Research and Development. Additionally, the Scottish Government and the Northern Ireland Statistics and Research Agency publish National Statistics on R&D activity in Scotland and Northern Ireland, including the Business Enterprise Research and Development, Scotland, Gross Expenditure on Research and Development Scotland, and the Research & Development Survey (Northern Ireland). For access to these and other related publications on R&D activity in the UK, please visit: https://www.gov.uk/government/statistics/announcements

Statistics on Patent Box have been published on the same day as these statistics providing information on the numbers, value and cost to the Exchequer of Patent Box tax reliefs. The Patent Box enables companies to apply a lower rate of Corporation Tax to profits earned after 1 April 2013 from its patented inventions.

4.13 National Statistics

National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference. For general enquiries about National Statistics contact the National Statistics Public Enquiry Service. Telephone: 0845 601 3034 Overseas: +44 (1633) 653 599 Minicom: 01633 812399 Email: [email protected] Fax: 01633 652747 Letters: Customer Contact Centre, Room 1.015, Cardiff Road, Newport, NP10 8XG You can also find National Statistics on the internet at: www.statistics.gov.uk

https://www.gov.uk/government/statistics/announcements


26

4.14 Contact points

Enquiries about these statistics should be directed to the responsible statisticians: Will Jones and Dominica Parry KAI Direct Business Taxes HM Revenue & Customs Room 3/60 100 Parliament Street London SW1A 2BQ Telephone: 03000 554666 03000 589593 E-mail: [email protected] Media enquiries should be directed to the HMRC Press Office contacts listed on the front page of this release.


27

Annex A: Statistical Reference Tables – RD1 to RD8

RD1 Claims for the R&D tax credit by scheme and financial year, 2000-01 to 2017-18 1 2 3 4 5 6

Numbers: Actual

Deductions

from CT

liability

Payable

credits

Combination TOTAL Large

company

R&D scheme

RDEC

scheme

SME claims

in large

company

and RDEC

scheme

TOTAL claims returns companies

2000-01 985 635 240 1,860 1,860 1,860 1,780

2001-02 1,650 1,130 625 3,410 3,410 3,410 3,270

2002-03 2,370 1,380 880 4,640 630 60 690 5,320 5,290 5,110

2003-04 2,940 1,290 940 5,160 920 120 1,050 10 6,210 6,130 5,950

2004-05 3,120 1,280 920 5,310 1,090 220 1,310 10 6,620 6,480 6,310

2005-06 2,960 1,100 900 4,960 1,200 290 1,490 10 6,450 6,280 6,120

2006-07 3,230 1,060 990 5,270 1,320 350 1,670 10 6,940 6,750 6,560

2007-08 3,760 1,090 1,130 5,990 1,640 400 2,030 10 8,020 7,800 7,570

2008-09 4,180 570 1,910 6,670 1,810 440 2,260 10 8,920 8,660 8,470

2009-10 4,820 880 1,770 7,470 1,830 490 2,320 10 9,770 9,480 9,250

2010-11 5,460 800 2,020 8,280 1,960 530 2,490 10 10,750 10,410 10,200

2011-12 6,770 800 2,460 10,030 2,150 510 2,660 10 12,670 12,320 12,050

2012-13 8,810 1,240 3,100 13,140 2,380 580 2,960 10 16,070 15,660 15,280

2013-14 10,245 2,700 2,635 15,585 1,675 1,115 955 3,750 <10 19,335 18,885 18,305

2014-15r18,480 4,100 7,120 29,700 1,335 2,390 1,980 5,705 <10 35,410 35,045 34,020

2015-16r22,160 6,320 8,510 36,990 915 2,915 2,695 6,520 <10 43,515 43,170 41,910

2016-17p,r26,010 7,935 11,100 45,045 - 3,805 3,480 7,285 <10 52,335 52,105 50,455

2017-18p23,640 7,600 10,835 42,075 - 3,070 3,485 6,555 <10 48,635 48,505 47,050

1. Estimates of the number of claims are rounded to the nearest ten up to 2012-13 and to the nearest five from 2013-14 onwards. Totals may not sum due to rounding.

2. The number of claims is based on the date that the accounting period covered by the claim ends. Table RD1 is comparable with cost data in Table RD2

where costs are apportioned on the same accounting period basis.

5. The Research and Development Expenditure Credit (RDEC) scheme was introduced on 1 April 2013.

6. Where companies have claimed under both the large company and RDEC scheme in the same year, these claims have been counted under the RDEC scheme.

p. Provisional

r. Revised

SME R&D scheme Schemes for large companies Vaccines

research

relief

3. The figures are based on claims for R&D tax credits made by companies in Company Tax returns received on or before 30 June 2019.

4. Statistics in this table are consistent with HMRC’s policies on dominance and disclosure.

All R&D schemes

28

RD2 Cost of support claimed for the R&D tax credit by scheme and financial year on an accounting period basis, 2000-01 to 2017-18 1 2 3 4 5 6 7 8

£ million

Deductions

from CT

liability

Payable

credits

TOTAL Large

company

R&D scheme

RDEC

scheme

SME claims

in large

company

and RDEC

scheme

TOTAL

2000-01 10 60 70 70

2001-02 25 150 170 170

2002-03 30 175 210 200 * 200 410

2003-04 40 155 195 340 * 340 * 540

2004-05 50 140 190 390 * 400 * 590

2005-06 40 145 185 450 10 460 * 640

2006-07 50 150 200 480 10 490 * 690

2007-08 65 180 245 550 10 560 * 810

2008-09 80 190 265 730 10 740 * 1,000

2009-10 130 195 320 670 10 690 * 1,010

2010-11 155 195 355 750 10 760 * 1,110

2011-12 210 225 435 780 10 790 * 1,220

2012-13 315 300 615 760 10 770 * 1,370

2013-14 350 355 705 280 625 30 930 * 1,640

2014-15r600 710 1,310 120 1,450 100 1,670 * 2,985

2015-16r740 1,015 1,750 70 1,875 155 2,105 * 3,860

2016-17p,r920 1,295 2,215 - 1,965 205 2,170 * 4,390

2017-18p870 1,390 2,260 - 1,845 225 2,070 * 4,330 3

2. Companies have a period of one year to submit returns after the end of the accounting period and another year to amend or withdraw a claim.

Therefore, the provisional data for 2016-17 has been revised and data for 2017-18 remains provisional and subject to change due to claims not yet received.

3. Based on the timing of claims received in previous years, we estimate that the final cost for all R&D schemes in 2017-18 will be approximately £4,950m.

4. Estimates are rounded to the nearest £10m up to 2012-13 and to the nearest £5m from 2013-14 onwards. Totals may not sum due to rounding.

5. Tables RD2 and RD3 are not directly comparable due to the time basis on which they are calculated. The accounting period basis in Table RD2 apportions costs to

financial years based on the accounting period end-date of the claim. The receipts basis in Table RD3 apportions costs based on when HM Revenue & Customs

is estimated to incur the cost. Table RD2 is comparable with Table RD1 where the number of claims is also presented on an accounting period basis.

Where claims are for a combination of deductions from Corporation Tax liability and payable credit, the cost has been split into the two separate components.



8. Where companies have claimed under both the large company and RDEC scheme in the same year, these amounts have been counted under the RDEC scheme.

* Negligible amount (less than £5m)

p. Provisional

r. Revised



research

relief

All R&D

schemes

29

RD3 Cost of support claimed for the R&D tax credit by scheme and financial year on a receipts basis, 2000-01 to 2017-18 1 2 3 4 5 6

£ million

Deductions

from CT

liability

Payable

credits

TOTAL Large

company

R&D scheme

RDEC

scheme

SME claims

in large

company

and RDEC

scheme

TOTAL

2000-01 * 20 20 20

2001-02 10 90 100 100

2002-03 30 160 180 180 * 190 370

2003-04 30 170 200 330 * 330 * 540

2004-05 40 150 190 390 * 390 * 590

2005-06 50 140 190 440 * 450 * 640

2006-07 40 150 190 480 10 490 * 680

2007-08 60 160 220 550 10 560 * 770

2008-09 70 180 250 720 10 720 * 980

2009-10 100 190 290 670 10 690 * 970

2010-11 140 190 330 740 10 760 * 1,090

2011-12 180 200 380 770 10 780 * 1,160

2012-13 230 230 460 770 10 770 * 1,230

2013-14 320 310 630 310 600 25 925 * 1,555

2014-15r355 390 745 130 525 25 685 * 1,430

2015-16r540 670 1,210 75 1315 85 1,475 * 2,685

2016-17p,r715 980 1,695 5 1805 150 1,955 * 3,650

2017-18p865 1,240 2,110 - 1950 195 2,145 * 4,255

1. Estimates of the cost of support claimed are rounded to the nearest £10m up to 2012-13 and to the nearest £5m from 2013-14 onwards.

Totals may not sum due to rounding.

2. Tables RD2 and RD3 are not directly comparable due to the time basis on which they are calculated. The accounting period basis in Table RD2 apportions

costs to financial years based on the accounting period end date of the R&D tax claim. The receipts basis in Table RD3 apportions costs based on when HM

Revenue & Customs is estimated to incur the cost arising from R&D tax credits. Where claims are for a combination of deductions from Corporation Tax

liability and the payable credit, the cost of the claim has been split into the two separate components.



6. Where companies have claimed under both the large company and RDEC scheme in the same year, these amounts have been counted under the RDEC scheme.


p. Provisional

r. Revised


research

relief

All R&D

schemes

3. The figures are based on claims for the R&D tax credits made by companies in Company Tax returns received on or before 30 June 2019.

30

RD4 R&D expenditure used to claim R&D tax credits by scheme and financial year, 2000-01 to 2017-18 1 2 3 4

£ million

SME R&D scheme Vaccines Research

Large company

R&D scheme

RDEC scheme SME claims in

large company and

RDEC scheme

Relief

2000-01 360 360

2001-02 890 890

2002-03 1,140 2,620 30 * 3,780

2003-04 1,130 4,520 40 10 5,700

2004-05 1,150 5,250 60 20 6,470

2005-06 1,090 5,960 170 10 7,240

2006-07 1,280 6,390 180 20 7,870

2007-08 1,530 7,350 150 20 9,050

2008-09 1,700 9,100 170 20 10,990

2009-10 1,740 7,990 230 20 9,980

2010-11 1,960 8,910 170 20 11,070

2011-12 2,260 9,580 180 30 12,050

2012-13 2,670 10,490 180 20 13,360

2013-14 2,940 4,005 8,285 380 * 15,625

2014-15r5,110 1,895 18,525 1,260 * 26,810

2015-16r6,505 1,185 21,900 1,845 * 31,460

2016-17p,r8,000 - 22,490 2,335 * 32,845

2017-18p8,340 - 20,520 2,455 * 31,320

1. Estimates of the expenditure used to claim tax credits are rounded to the nearest £10m up to 2012-13 and to the nearest £5m from 2013-14 onwards.



* Value suppressed in line with HMRC's disclosure policy

p. Provisional

r. Revised

2. Totals may not sum due to rounding.

Schemes for large companies All R&D schemes

31

RD5 Regional analysis of number and cost of R&D tax credit claims, 2016-17 1 2 3 4 5 p r

Numbers: actual

Amounts: £ million

Government Office Region

Number of

claims

Amount

claimed

Number of

claims

Amount

claimed

Number of

claims

Amount

claimed

Number of

claims

Amount

claimedExpenditure

North East 1,485 65 100 20 120 5 1,705 90 540

North West 4,865 185 310 90 270 10 5,445 285 1,820

Yorkshire and The Humber 3,030 110 240 55 225 10 3,495 170 1,135

East Midlands 2,920 115 220 65 235 10 3,380 195 1,335

West Midlands 3,970 150 285 200 255 15 4,510 365 3,030

East of England 4,370 255 330 285 320 20 5,015 560 4,385

London 8,875 590 980 645 620 50 10,475 1,285 10,015

South East 6,750 390 640 385 585 40 7,975 810 6,225

South West 3,435 125 215 90 265 10 3,915 230 1,615

Wales 1,475 60 95 20 115 5 1,685 90 545

Scotland 1,910 95 250 85 290 15 2,450 195 1,470

Northern Ireland 1,220 45 90 20 125 * 1,440 75 480

Channel Islands / Isle of Man 10 * 0 0 * * 10 * *

Total 44,315 2,190 3,750 1,955 3,430 200 51,500 4,350 32,595

1. Regional allocation is based on the postcode of the company's registered address, which might not correspond to

where the R&D activity takes place, so caution must be exercised when interpreting these figures.

2. Figures exclude claims where region is not known.

3. Numbers are rounded to the nearest 5 and amounts are rounded to the nearest £5m. Totals may not sum due to rounding.


5. Expenditure is the expenditure used to claim R&D tax credits

p. Provisional

r. Revised

* Value suppressed as cell count is less than 5 or amount is less than £5m.

Schemes for large companies All schemes

SME claims in RDEC

scheme

SME R&D scheme

RDEC scheme

32

RD5 Regional analysis of number and cost of R&D tax credit claims, 2017-18 1 2 3 4 5 p

Numbers: actual

Amounts: £ million

Government Office Region

Number of

claims

Amount

claimed

Number of

claims

Amount

claimed

Number of

claims

Amount

claimed

Number of

claims

Amount

claimedExpenditure

North East 1,410 60 90 20 115 5 1,615 85 510

North West 4,385 170 250 90 295 15 4,930 275 1,775

Yorkshire and The Humber 2,910 115 210 45 225 10 3,350 175 1,095

East Midlands 2,730 110 160 60 230 15 3,120 180 1,235

West Midlands 3,635 150 250 230 260 15 4,140 395 3,330

East of England 4,130 275 260 250 320 25 4,715 555 4,085

London 8,290 630 780 560 605 50 9,675 1,240 9,000

South East 6,330 385 535 385 575 45 7,440 810 6,120

South West 3,255 125 165 85 260 15 3,680 225 1,570

Wales 1,350 70 65 20 115 5 1,530 95 525

Scotland 1,735 95 195 65 280 10 2,210 175 1,195

Northern Ireland 1,100 45 75 25 130 * 1,310 75 505

Channel Islands / Isle of Man 10 * * * * * 10 * 5

Total 41,275 2,235 3,030 1,825 3,410 215 47,720 4,280 30,945


SME R&D scheme All schemes

2. Figures exclude claims where region is not known.

Schemes for large companies



RDEC scheme SME claims in RDEC

scheme

1. Regional allocation is based on the postcode of the company's registered address, which might not correspond to

where the R&D activity takes place, so caution must be exercised when interpreting these figures.


p. Provisional

33

RD6 Industry sector analysis of number and cost of R&D tax credit claims, 2016-17 1 2 3 4 5 6 p r


Industry sector

Number of

claims

Amount

claimed

Number of

claims

Amount

claimed

Number of

claims

Amount

claimed

Number of

claims

Amount

claimedExpenditure

A. Agriculture, Forestry, Fishing 350 15 30 5 30 * 405 25 140

B. Mining & Quarrying 50 5 50 90 10 * 105 95 1,050

C. Manufacturing 11,055 480 1,200 805 1,015 50 13,270 1,335 11,575

D. Electricity, Gas, Steam and Air Conditioning 95 10 45 5 * * 145 15 100

E. Water, Sewerage and Waste, 280 10 40 10 10 * 330 20 160

F. Construction 1,940 90 255 50 65 * 2,260 145 980

G. Wholesale & Retail Trade, Repairs 5,145 165 375 70 285 10 5,805 240 1,510

H. Transport & Storage 370 15 80 15 30 * 475 30 235

I. Accommodation & Food 225 5 20 * 10 * 255 10 40

J. Information & Communication 11,160 570 500 175 750 55 12,410 805 4,715

K. Financial & Insurance 690 50 240 205 50 5 980 260 2,560

L. Real Estate 190 10 15 * 5 * 210 10 35

M. Professional, Scientific & Technical 8,640 555 535 365 935 70 10,115 990 6,840

N. Admin & Support Services 2,640 115 260 50 145 * 3,050 170 1,045

O. Public Administration, Defence & Social Services * * 0 0 0 0 * * *

P. Education 460 15 40 25 20 * 520 35 330

Q. Health & Social Work 440 15 20 * 40 * 500 20 115

R. Arts, Entertainment & Recreation 470 45 35 50 15 * 525 95 725

S. Other services activities 785 25 15 * 45 * 850 30 135

Total 44,990 2,205 3,750 1,920 3,465 205 52,210 4,330 32,290

Notes

r. Revised

This coding might not correspond to the industry sector of the R&D activity, so caution must be exercised when interpreting these figures.

2. Figures exclude claims where industry sector is not known.

SME R&D scheme




These sectors were therefore excluded from the table.


p. Provisional

1. Industry sector is based on primary SIC2007 coding of registered company.

5. No claims for R&D tax relief were received from companies classified within SIC2007 sectors T (Activities of households as employers) and U (Activities of extraterritorial organisations and bodies).

Numbers: actual

Amounts: £ million

All schemes


scheme

34

RD6


Industry sector

Number of

claims

Amount

claimed

Number of

claims

Amount

claimed

Number of

claims

Amount

claimed

Number of

claims

Amount

claimedExpenditure

A. Agriculture, Forestry, Fishing 335 15 25 5 30 * 385 20 145

B. Mining & Quarrying 50 * 35 105 10 * 95 110 1,190

C. Manufacturing 9,900 465 1,020 730 1,010 55 11,925 1,250 10,520

D. Electricity, Gas, Steam and Air Conditioning 80 5 35 * 10 * 125 10 85

E. Water, Sewerage and Waste, 245 10 35 10 10 * 290 20 165

F. Construction 1,790 90 190 40 45 * 2,025 135 870

G. Wholesale & Retail Trade, Repairs 4,790 160 280 65 270 10 5,335 235 1,460

H. Transport & Storage 320 15 80 15 25 * 425 30 250

I. Accommodation & Food 210 5 10 * 10 * 230 5 25

J. Information & Communication 10,490 600 395 170 745 55 11,635 820 4,685

K. Financial & Insurance 680 55 185 155 60 5 925 215 2,005

L. Real Estate 200 10 10 * 5 * 215 10 30

M. Professional, Scientific & Technical 8,165 590 440 350 945 80 9,545 1,020 6,775

N. Admin & Support Services 2,560 130 185 55 170 5 2,920 190 1,150

O. Public Administration, Defence & Social Services 0 0 0 0 0 0 0 0 0

P. Education 450 15 35 30 15 * 500 45 385

Q. Health & Social Work 460 20 20 * 40 * 520 25 135

R. Arts, Entertainment & Recreation 440 30 20 40 15 * 475 75 620

S. Other services activities 745 25 20 * 50 * 815 30 160

Total 41,905 2,250 3,020 1,790 3,460 220 48,385 4,260 30,655

Notes

SME R&D scheme

Industry sector analysis of number and cost of R&D tax credit claims, 2017-18 1 2 3 4 5 6 p

Numbers: actual

Amounts: £ million

All schemes

2. Figures exclude claims where industry sector is not known.




scheme

1. Industry sector is based on primary SIC2007 coding of registered company.

This coding might not correspond to the industry sector of the R&D activity, so caution must be exercised when interpreting these figures.


5. No claims for R&D tax relief were received from companies classified within SIC2007 sectors T (Activities of households as employers) and U (Activities of extraterritorial organisations and bodies).

These sectors were therefore excluded from the table.


p. Provisional

35

RD7 Analysis of number and cost of R&D tax credit claims by cost band, 2016-17 1 2 3 4 5 p r

Numbers: actual

Amounts: £ million

Cost Band

Number

of claims

Amount

claimed

Number

of claims

Amount

claimed

Number

of claims

Amount

claimed

Number

of claims

Amount

claimed

Up to £5k 8,290 20 395 * 950 * 9,635 20

£5k to £10k 6,415 45 305 * 430 * 7,150 50

£10k to £15k 4,820 60 210 * 310 * 5,340 70

£15k to £20k 3,800 65 175 * 205 * 4,180 75

£20k to £25k 2,955 65 140 * 195 * 3,290 75

£25k to £30k 2,325 65 140 * 140 * 2,605 75

£30k to £40k 3,550 125 250 10 225 10 4,025 145

£40k to £50k 2,460 110 170 10 150 5 2,780 125

£50k to £100k 5,925 415 530 40 380 25 6,835 480

£100k to £250k 3,310 495 605 95 305 50 4,220 640

£250k to £500k 795 270 345 125 130 45 1,270 440

£500k to £1m 285 190 205 145 55 35 545 370

£1m to £2m 85 115 150 210 10 15 245 340

Over £2m 35 170 180 1,325 0 0 215 1,495

Total 45,045 2,215 3,805 1,965 3,480 205 52,330 4,385

Notes



4. Figures are provisional and have been revised as a result of more returns being received by HMRC since last year's publication.


p. Provisional

r. Revised


1. Numbers are rounded to the nearest 5 and amounts are rounded to the nearest £5m.

SME R&D scheme Schemes for large companies All schemes


RDEC scheme

36

RD7 Analysis of number and cost of R&D tax credit claims by cost band, 2017-18 1 2 3 4 5 p

Numbers: actual

Amounts: £ million

Cost Band

Number

of claims

Amount

claimed

Number

of claims

Amount

claimed

Number

of claims

Amount

claimed

Number

of claims

Amount

claimed

Up to £5k 7,725 20 315 * 955 * 8,995 20

£5k to £10k 5,710 40 200 * 430 * 6,340 45

£10k to £15k 4,275 55 170 * 310 * 4,755 60

£15k to £20k 3,350 60 135 * 195 * 3,680 65

£20k to £25k 2,770 60 90 * 180 * 3,040 65

£25k to £30k 2,260 60 115 * 135 * 2,510 70

£30k to £40k 3,385 115 165 5 220 10 3,770 130

£40k to £50k 2,435 110 135 5 155 5 2,725 120

£50k to £100k 5,395 375 425 30 380 25 6,200 430

£100k to £250k 3,455 520 535 85 315 50 4,305 655

£250k to £500k 870 295 270 95 130 45 1,270 435

£500k to £1m 305 210 190 135 55 35 550 380

£1m to £2m 90 125 150 210 20 25 260 360

Over £2m 50 215 170 1,260 * * 225 1,480

Total 42,075 2,260 3,070 1,845 3,485 225 48,635 4,330

Notes



They exclude a small number of large company claims made alongside the returns totalling around £20 million a year in Exchequer cost.

4. Figures are provisional and expected to increase as more returns are submitted for 2017-18



p. Provisional

1. Estimates of the cost of support claimed are rounded to the nearest £5m.

SME R&D scheme All schemes


RDEC scheme


37

RD8 Number of first time applicants for R&D tax credit by company size on an accounting period basis, 2000-01 to 2017-18 1 2 3 4 5

Numbers: actual

SME Large

Company

Total

2000-01 1,785 1,785

2001-02 2,410 2,410

2002-03 2,410 680 3,090

2003-04 2,105 595 2,700

2004-05 1,835 515 2,350

2005-06 1,345 480 1,825

2006-07 1,455 535 1,990

2007-08 1,795 725 2,520

2008-09 1,945 750 2,695

2009-10 2,020 630 2,650

2010-11 2,305 685 2,990

2011-12 3,090 700 3,795

2012-13 4,270 750 5,020

2013-14 4,785 1,185 5,965

2014-15r8,625 1,570 10,195

2015-16r10,540 1,735 12,275

2016-17p,r12,120 1,750 13,870

2017-18p6,875 1,145 8,020

Notes

1. Estimates of the number of applicants are rounded to the nearest 5.


3. The figures are based on numbers for R&D tax credits made by companies in Company Tax returns received on or before 30 June 2019.

4. Figures for 2017-18 are expected to increase as more returns are received by HMRC.


p. Provisional

r. Revised

released: research and development 10 october 2019 tax credits statistics … · 2019-10-08 ·...

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