A new study of HMRC data has uncovered that UK small and medium-sized enterprises (SMEs) are failing to claim up to £47 billion in available Research and Development (R&D) tax relief. Despite 36% of SMEs engaging in innovative activities, fewer than 6% submit claims, leaving 38,000 eligible businesses missing out on an average tax saving of £70,000.
The research, conducted by small business accountants Wellers, highlights significant regional disparities in R&D tax relief claims, with some of the UK’s most innovative regions among the worst offenders.
Regional Breakdown of Unclaimed Relief
Buckinghamshire tops the list for potential savings, with businesses in the county typically saving £138,000 when they claim R&D tax relief. However, more than 18,000 eligible firms in the area are failing to take advantage of the scheme.
Similarly, Berkshire, which ranks second for potential tax relief, sees fewer than 5% of its innovative businesses making claims.
Even Oxfordshire, home to a number of cutting-edge industries and research institutions, has low claim rates—just 893 businesses (6%) out of thousands of eligible companies have submitted R&D tax claims.
Meanwhile, Greater Manchester leads the UK in unclaimed R&D tax relief, with businesses missing out on a staggering £2.7 billion. While the region’s SMEs have collectively saved £225 million, the study suggests a significant gap remains.
Calls for Greater Awareness and Support
Tom Biggs, Partner at Wellers, believes these figures highlight a huge opportunity for SMEs to reduce tax liabilities and fuel innovation.
“Our analysis shows a clear opportunity for UK SMEs to reduce their tax liabilities. These reliefs are crucial for supporting scaling businesses and driving innovation, especially when the Autumn Budget has brought fresh challenges.”
With thousands of businesses missing out on vital financial support, experts argue that greater awareness and assistance are needed to help SMEs claim what they are entitled to.
“We believe that with the right help, small businesses across the UK can continue to thrive,” Biggs adds.
A Missed Opportunity for Growth
The R&D tax relief scheme is designed to incentivize innovation by allowing businesses to claim back a percentage of their spending on research and development. However, the low uptake suggests that many companies are either unaware of their eligibility or find the process too complex.
As the UK government looks to bolster economic growth and technological advancement, ensuring SMEs access the full benefits of the R&D tax relief scheme will be crucial in helping businesses invest, expand, and compete on a global scale.
