R&D Tax Credits
UK R&D Tax Credit Statistics 2026: The Complete HMRC Data Picture
£7.6 billion claimed. 26% fewer claims. 1 in 5 now face an HMRC enquiry. Here is what the latest HMRC data says about UK R&D tax relief, and what it means if you run a software company.
The headline numbers
HMRC's Research and Development Tax Credits Statistics release (September 2025) is the most recent authoritative dataset on the UK R&D tax relief scheme. It covers the 2023-24 tax year, the first full year after the April 2023 rate cuts and the introduction of the mandatory Additional Information Form.
| Metric | 2023-24 | YoY change |
|---|---|---|
| Total R&D tax relief claimed | £7.6 billion | −2% |
| Number of claims | 46,950 | −26% |
| Qualifying R&D expenditure | £46.1 billion | −1% |
| SME scheme relief | £3.15 billion | −29% |
| RDEC scheme relief | £4.41 billion | +36% |
| Average claim value (all schemes) | up ~33% | +33% |
Source: HMRC, Research and Development Tax Credits Statistics, September 2025.
The story behind the numbers
Three things happened simultaneously in 2023-24, and the data reflects all of them.
1. The SME rate cut bit hard
From 1 April 2023 the SME enhanced deduction dropped from 130% to 86%, and the payable credit rate fell from 14.5% to 10% for most loss-making SMEs. A loss-making SME that previously received roughly 33p per £1 of qualifying spend now receives about 18.6p. That is a 44% cut in cash value for the same work.
The effect is visible in the headline figures. SME scheme relief dropped 29% year on year to £3.15 billion, even though qualifying expenditure across all schemes only fell 1%. For the first time, large-company RDEC claims now represent the larger share of total UK R&D support.
2. Claim volume collapsed at the small end
Claim numbers fell 26% to 46,950. The contraction was heavily concentrated in the smallest claims: those worth under £15,000. Larger claims held steady or grew. This is why the average claim value jumped roughly 33% year on year, according to HMRC's own commentary on the release. It is not that claims are getting more generous. It is that the smallest claimants are leaving the system, so the average naturally rises even though individual claim sizes are not.
The implication is uncomfortable. Small legitimate claimants face higher compliance friction, so they skip the claim entirely. Policy that was designed to push out fraudulent boilerplate claims is also pushing out real ones.
3. HMRC enquiry activity went from 1% to 20%
Before 2022, roughly 1% of R&D tax credit claims faced an HMRC enquiry. By 2024-25, that rate had climbed to around 20%: a twentyfold increase. HMRC expanded the number of R&D compliance caseworkers from about 100 to over 500 during this period.
Crucially, the rejection rate varies enormously depending on which HMRC team handles the enquiry:
- Wealthy and Mid-sized Business Compliance (WMBC): almost all enquiries end with the claim being agreed.
- Individual and Small Business Compliance (ISBC): the vast majority of enquiries end with the entire claim being rejected.
Both directorates handle R&D enquiries, but smaller claimants, including most UK software startups, are routed to ISBC. The directorate you are routed to is more predictive of your outcome than the quality of your underlying claim.
Software companies in the data
The Information and Communication sector, which is where most UK software companies sit on HMRC's classification, is the largest source of R&D claims by volume:
| Sector | Share of claims | Share of total relief |
|---|---|---|
| Information & Communication | 26% | 21% |
| Manufacturing | 26% | 26% |
| Professional, Scientific & Technical | 19% | 24% |
| Top three combined | 72% | 71% |
Sector splits reported by HMRC in the September 2025 release. Figures are rounded to the nearest whole percent and apply to the 2023-24 tax year.
Notice the gap between Information & Communication's share of claims (26%) and its share of total relief (21%). Software claims tend to be smaller on average than manufacturing or professional services claims. This also means software companies are over-represented in the under-£15,000 claim band that is contracting the fastest.
Combine that with the ISBC routing bias and you get the uncomfortable reality for UK software founders: you are statistically the most exposed category of claimant. Smaller average claim, worse HMRC directorate, tightest compliance scrutiny.
What the Additional Information Form changed
The Additional Information Form (AIF) has been mandatory for all R&D claims submitted from 8 August 2023. It requires structured disclosure of:
- The specific projects claimed and their scientific or technological advance
- The baseline technology each project went beyond
- Named competent professionals leading each project
- A breakdown of qualifying expenditure by category and project
- Agent details, including any third party preparing the claim
HMRC's own estimates suggest the combination of AIF, the Claim Notification Form and the Mandatory Random Enquiry Programme reduced the cost of error and fraud by around £861 million across three years. That is a meaningful policy win, but the dataset cannot distinguish legitimate claims that were deterred from fraudulent claims that were stopped.
In practical terms, the AIF made boilerplate claims much harder to get away with. It also made every claim more expensive to prepare, because every project needs a proper technical narrative tied to specific qualifying work, not a generic paragraph copied from a template.
The merged scheme (not yet in the data)
From 1 April 2024 the SME and RDEC schemes merged into a single unified regime, with a secondary Enhanced R&D Intensive Support (ERIS) scheme for loss-making R&D intensive SMEs (more than 30% of total expenditure on qualifying R&D). Key headlines:
- Merged scheme: 20% above-the-line credit, broadly equivalent to previous RDEC
- ERIS: effective benefit of roughly 27p per £1 of qualifying spend for loss-making R&D intensive SMEs. The R&D intensity threshold was originally set at 40% for expenditure on or after 1 April 2023, then lowered to 30% for accounting periods beginning on or after 1 April 2024
- Overseas contractor and externally provided worker costs largely excluded
- Subcontractor rules rewritten to sit with the customer, not the contractor, in most cases
The 2023-24 HMRC release does not yet include merged-scheme data. That will land in the September 2026 publication. Early anecdotal reports from practitioners suggest the merged scheme has not reversed the decline in small claim volumes.
What this means if you run a UK software company
Five takeaways from the data that you can act on today:
- Assume you will be enquired. A 20% enquiry rate is not occasional bad luck, it is the base rate. Prepare your claim as though HMRC will read it line by line, because they probably will.
- Evidence is contemporaneous, not retrospective. HMRC wants to see evidence created during the work itself. Git commit history, pull request discussions, design docs, issue trackers with problem descriptions, and records of approaches you tried and abandoned are all strong evidence. A technical narrative written months later from memory is weak evidence.
- Tie every pound to a project and an advance. HMRC expects expenditure apportioned project by project, not a blanket percentage of the payroll. If you cannot defend the percentage you claimed for a given person, take it out.
- Do not claim routine engineering. Building on known technologies, integrating third-party APIs, migrating between frameworks, or delivering features that a competent professional could readily implement do not qualify, no matter how much work they took. The bar is scientific or technological uncertainty, not difficulty.
- Budget the preparation cost. A defensible claim now takes real time to prepare properly. Whether you use a specialist, an accountant, or a tool like CodeClaim, factor the preparation cost into your decision on whether to claim at all.
The provisional nature of the data
All 2023-24 figures in this release are provisional. HMRC revises them in subsequent years as late claims arrive and compliance activity concludes. Historically the provisional figures have been slightly understated, so the final claim count and relief total are likely to be modestly higher once the September 2026 revision lands. That said, the direction of travel (fewer claims, more scrutiny, higher average values) is extremely unlikely to reverse.
Methodology and sources
All figures in this article come directly from HMRC's official publications. Primary source: Research and Development Tax Credits Statistics: September 2025. Compliance and enquiry rate commentary reflects HMRC's Annual Report and the Chartered Institute of Taxation's published correspondence with HMRC on R&D enquiry outcomes. All statistics describe the 2023-24 tax year unless otherwise stated.
CodeClaim is not a tax advisor. This article is commentary on publicly available HMRC data. Always consult a qualified accountant or R&D tax specialist before submitting a claim.
Related guides
Build a defensible R&D claim from your GitHub history
CodeClaim turns commit history, pull requests, and issue trackers into an HMRC-compliant R&D tax credit report with contemporaneous technical evidence. Designed for UK software companies who want to claim without paying 15-20% of their relief to a consultancy.