In 2019-20 and 2020-21, £4.2bn was paid to small and medium sized businesses (SMEs), rising to £4.7bn in 2021-22. There were 71,900 claimants in 2019-20, increasing to 74,100 in 2020-21.

Since then, the level of relief has been dropping, estimated to fall to £3.1bn this tax year, from £3.4bn in 2023-24. There is no data on the number of claimants yet for these years due to companies having up to two years to file for R&D relief.

HMRC said the drop in claimants was due to the ‘introduction of the mandatory additional information online form’, which has resulted in large numbers of claims being rejected.

Katy Long, associate director at ForrestBrown said: 'It’s important to acknowledge R&D tax relief’s positive role as a catalyst for business innovation. The changing costs we have seen in recent years are a product of the policy reforms introduced during a turbulent period for the scheme, but this doesn’t negate the value of the incentive.

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