UK SMEs risk losing out on £47bn in R&D tax relief

A new analysis of HMRC data has found that UK SMEs are failing to claim up to £47 billion in Research and Development (R&D) tax relief.

While 36% of small and medium-sized enterprises across the country engage in innovative activities, fewer than 6% of them actually submit R&D tax claims. This leaves potentially 38,000 businesses each missing an average saving of £70,000.

The research, conducted by small business accountants Wellers, also highlights considerable regional variations. Buckinghamshire stands out as the area with the highest potential tax savings—companies there typically save £138,000 on average. Yet more than 18,000 eligible businesses in the county may be missing out by not making a claim.

Berkshire ranks second in terms of potential savings, yet fewer than 5% of its businesses involved in innovation take advantage of R&D relief. Oxfordshire, a renowned innovation hub, similarly sees low claim rates: just 893 (6%) of its innovative businesses file a claim.

Greater Manchester tops the country for unclaimed R&D tax relief, with the study indicating that despite saving a collective £225 million, regional SMEs are still forgoing a further £2.7 billion. Tom Biggs, Partner at Wellers, comments: “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 so many SMEs overlooking R&D tax claims, experts say more support and awareness are needed to spur innovation and underpin growth. “We believe that with the right help, small businesses across the UK can continue to thrive,” Biggs adds.

Jamie Young

Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.

When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.