Government statistics show that the average SME R&D Tax Credit claim is £52,876. But there are some interesting discrepancies when you look at the distribution of claims submitted in 2016-17 tax year by region.

SME R&D Tax Credit Statistics

This table breaks down each region’s figures by average claim amount, the number of claims submitted and the total value of these claims.

 

RegionAverage Claim AmountTotal Claims SubmittedTotal Value of Claims
Scotland£52,8761,425£75m
Wales£46,2961,080£50m
Northern Ireland£40,201995£40m
North East£40,4643,460£140m
North West£41,6123,845£160m
Midlands£42,1264,985£210m
South West£40,5902,710£110m
South East£62,8575,250£330m
East of England£63,3483,315£210m
London£74,6956,560£490m

 

What do the SME R&D Tax Credit figures tell us?

These statistics are interesting in different ways, depending on how you look at them. Here are a couple of our takeaways:

  • The average SME R&D Tax Credit claim in the UK is £52,876. The only region near that figure is Scotland. And the only regions over that figure are London, the East of England and the South East. All the other regions have an average claim of at least £10,000 less than the average.
  • There is a massive discrepancy in the number of claims made by each region. London submitted the highest number at 6,500 claims and Northern Ireland only submitted 995.
  • So it’s not surprising that the highest total value is London’s £490m and the lowest is Northern Ireland’s £50m.
  • England’s regions each have a total value of claims at least £100m more than the UK’s other countries.
  • Northern Ireland (995), Wales (1,080) and Scotland (1,425) are at the bottom of the charts for number of claims submitted and total amount claimed (£40m, £50m and £75m respectively).
  • Despite this, Scotland has the 4th highest average claim amount of £52,632.
  • The Midlands made 4,985 claims totalling £210m, the third largest number of claims in the country. But their average claim is only £42,126. Quite a stark difference when compared to the second largest number of claims; 5,250 claims totally £330m and an average of £62,857.

What does it all mean?

Well, it’s the questions raised by these figures, and how they are answered, that create meaning to this set of statistics. Why are Scotland, Northern Ireland and Wales submitting so many fewer claims than England? Why do six of the ten regions have an average SME claim value that is significantly less than the UK’s average?

There is also another factor to consider. For the purposes of these statistics, a company’s region has been determined by the post code of its registered address. So the main office could be in the North East, with the actual R&D work being done in the North West. Does London have so many more claims because there are more company head offices based there?  Do we need to think about how much difference there is between where the R&D is happening and where the company is registered? If this only applies to a small number of companies, then it’s only a small percentage of the overall statistics. But, if this is the majority of companies, then are these statistics really representative of where we find UK R&D activities. (As measured through R&D Tax Credit claims.)

We don’t have the answers here as DSMR&DTaxCredits.co.uk. But we hope that these figures will, ultimately, be helpful to HMRC in increasing access to the R&D Tax Credit scheme, which is reinvestment in our economy as a whole.

Is my SME eligible to claim R&D Tax Credits?

Considering that the smallest SME R&D Tax Credit claim is still worth £40,201, it’s definitely worth finding out. You need to have a maximum of 500 employees and annual turnover maximum of £100million, or a balance sheet of up to £86million. HMRC defines any project that is aiming for “the resolution of scientific or technological uncertainty” as eligible for the tax relief. This is deliberately broad to encompass innovations across industry sectors.

There are certain processes you need to follow and evidence you must provide. It does not matter if you are profit or loss making or if your project ultimately fails. It really is a reward for effort and a great investment in your future innovations. We have all the details in our free R&D Tax Credit faq’s and you can get a more personalised estimate of what your claim could be worth by using our R&D Tax Credit Calculator.

 

Jamie Smith