Core Insights - The UK has experienced a slight downturn in R&D tax relief claims for the tax year 2023 to 2024, with a provisional estimate of £7.6 billion ($10.2 billion), representing a 2% decrease from the previous year [1] - R&D expenditure also fell by 1% to £46.1 billion ($62.03 billion) [1] Summary by Categories R&D Tax Relief Claims - The SME scheme saw a significant 29% reduction in tax relief claims, amounting to £3.15 billion, while the RDEC scheme experienced a 36% increase to £4.41 billion [2] - Overall, the number of R&D tax credit claims decreased by 26% year-on-year to 46,950, with the SME scheme facing a 31% reduction in claims and the RDEC scheme seeing a modest 5% drop [3] Impact on SMEs - There was a notable 45% fall in first-time claims from SMEs, attributed to lower relief rates and more demanding administrative requirements [4] - Concerns have been raised regarding the discouraging effect of recent changes on smaller businesses considering innovation investments [3] Larger Businesses and RDEC - Larger businesses have benefited from an increased share of relief at 47%, although the number of RDEC claims has decreased, but to a lesser extent [4] - The increased RDEC rate has made it more feasible for larger companies to undertake projects with higher financial certainty [5] Future Considerations - There are cautions against further changes that could undermine R&D investment, as recent reforms aimed at reducing error and fraud have had a positive impact [5] - HMRC has earmarked £2.4 billion for tax reliefs and expenditure credits for the creative industries for the fiscal year ending 31 March 2024 [5]