Fewer claims, bigger claims: what HMRC's latest R&D figures tell us

HMRC's latest R&D tax credits statistics, published on 29 September 2026, cover claims for accounting periods ending in 2024 to 2025. At first glance, the headline looks healthy. Total relief claimed rose 5% to £8.2 billion, and the qualifying R&D expenditure behind it rose 7% to £51 billion.

Look a little closer and a different picture comes through. The number of claims fell 17% to 40,325. Claims from SMEs fell 19%. The average claim value rose 27%. And the 6% of claims worth £500,000 and above now account for 69% of all relief claimed, up from 62% a year earlier.

Fewer & bigger claims. The question I keep coming back to is whether that describes a regime that is getting healthier, or one that is simply getting smaller. My honest answer is both, and the second part deserves far more attention than it is getting.

A perfect storm for SMEs

he fall in SME claims isn't down to one thing. Several pressures landed on smaller businesses at roughly the same time.

Less relief for innovative SMEs. Under the merged scheme, the value of relief available to many innovative SMEs has fallen by up to a half compared to a few years ago. That is particularly concerning. Startups are the drivers of genuinely groundbreaking innovation and the creators of high value jobs, and they are the businesses least able to absorb a cut in support.

A volume compliance programme that wore people down. HMRC's volume compliance work (run through what used to be the ISBC unit) was poorly handled in our experience. Too often it seemed that regardless of what information a business sent in, the claim was refused anyway. SMEs simply didn't have the resources to keep fighting, and I suspect many gave up on claims they were entitled to make. There is ample evidence of this.

Claim notification. Since April 2023, businesses claiming for the first time, or that haven't claimed in the previous three years, have had to notify HMRC in advance. Many startups and SMEs focus on the innovation rather than the tax consequences, and their regular accountants were not always aware of the requirement. Even HMRC got itself in a tangle explaining the rules at the R&D Consultative Forum in September 2024.

As a precaution, we submitted claim notifications for all of our existing clients, which HMRC accepted, but businesses that weren't yet our clients had no such safety net.

In the 2026 Autumn Budget, released on 28^th October 2026, the government finally announced that the Claim Notification Form requirement will be removed from 1 April 2027.

It's a welcome step, but it's disappointing that the change won't take effect sooner, particularly for businesses already navigating the administrative requirements in 2026. Until then, the existing deadlines still apply, and missing one still means losing the claim.

Put all of that together and the effect is clear. Anecdotally, a lot of SMEs are now very wary of making a claim at all. The regime has acted as a strong deterrent. Whether that was HMRC's intention, we don't know.

The first-time claimant figure is the one that worries me most

First time applicants fell 43% in 2023 to 2024, the fifth year in a row they have declined. In the SME scheme alone, first time applicants fell 53% to 3,405.

This is the pipeline of future innovators. These are the businesses that, given the right support early on, go on to become the high growth, high employment companies the regime was designed to encourage. Claim notification lands squarely on this group, and the numbers suggest it is landing hard.

Why the value of relief is still rising

If claims are falling, why is the total value of relief going up? The answer sits mostly with larger companies.

Ten years or so ago, large companies in many cases could only increase their losses through R&D relief. The RDEC changed that, giving them a far better chance of receiving a real cash benefit. The RDEC rate then rose to 20% for expenditure from April 2023, and 2024 to 2025 is the first full year at that rate, carried through into the merged scheme for accounting periods starting on or after 1 April 2024.

The figures follow. Large companies received £4.6 billion of relief against £3.6 billion for SMEs. Their qualifying expenditure rose 14% to £30.2 billion, and the number of claims they made rose 4% while SME claims fell. Claims over £2 million rose 14% in number and 21% in value.

That raises a policy question I think needs asking. Larger companies often shed jobs rather than create them. If the relief is increasingly flowing to the biggest claimants, is it still buying additional R&D and new jobs, or is it rewarding activity that would have happened anyway?

The regional figures point the same way. Companies with registered offices in London account for 24% of claims but 30% of the relief, with the South East and East of England showing a similar tilt. The money is concentrating geographically as well as by company size.

Compliance hasn't just tightened, it has changed

HMRC links some of the decline to tighter compliance measures. That's true, but it isn't the whole story. The reduction in relief and the claim notification rules have played their part too.

The experience of an enquiry has also shifted. With a constant succession of caseworkers, it can feel as though you have to answer the same questions again, or start from scratch, with each new HMRC officer.

The focus of those questions has moved as well. Until relatively recently, WMBC caseworkers were mainly asking whether the work was R&D at all, and how many projects qualified. Now they have moved on to cost apportionment. A just and reasonable apportionment based on minimal records is no longer enough. HMRC wants much more evidence of how percentages were arrived at.

And after a run of defeats at the First tier Tribunal on subsidised and subcontracted expenditure, HMRC has recently seemed to be on a bit of a roll with wins.

So where is the regime heading?

Smaller, more concentrated, and more compliance led. Some of that is welcome. Poor quality and opportunistic claims needed filtering out, and the market is better for it.

But a regime designed to encourage additional R&D can't measure its success by lower error rates alone. If the price of better compliance is that genuine SMEs and first time claimants stop coming forward, the regime is quietly failing the businesses it most needs to reach.

What this means for businesses now

For businesses that are still claiming, or thinking about it, the direction of travel is clear.

• Plan for scrutiny from day one. Assume your claim will be looked at, and build it on that basis.
• Keep records that support your apportionment. Contemporaneous time records and a clear rationale for any percentage split are now essential, not optional.
• Check your notification position early. If you are new to claiming, or haven't claimed in the last three years, don't assume your accountant has picked this up.
• Don't cave under an enquiry. If you have a legitimate claim, respond with evidence and get specialist support. Too many businesses have walked away from relief they were entitled to.

The regime is still worth engaging with. It simply rewards preparation far more than it used to.