Businesses are spending more on R&D – Are they making the most of R&D tax reliefs?

It has been an unusual time for innovative businesses in the UK, as the ability and desire to invest in R&D have been fluctuating over the years.

The pandemic disrupted the ability of many businesses to commit to long-term R&D investment and more recent economic factors have led to concern that investment may be negatively impacted.

However, there are signs of positivity that could be cultivated into a brighter, more innovative future for these businesses, but only if they know how to effectively leverage R&D tax relief claims.

Are businesses beginning to invest in R&D again?

While it is difficult to understand the impact that the economic uncertainty of 2025 has had on innovative businesses in the UK, we are now able to determine the trends of 2024.

These paint a positive picture by highlighting that spending on R&D was up 2.3 per cent in 2024 when compared to 2023.

This was due to an overall investment of £55.6 billion in R&D in the UK, which is certainly a sizeable amount.

However, this figure is tinged with an air of disappointment as it only restores R&D spending to where it was in 2021, so it is seemingly more of a course correction than a full rebound.

 If the UK wants to continue being a global force for innovation, then further R&D spending will be needed.

The Chancellor declared the importance of R&D in the Autumn Budget, but many businesses may still be left to figure things out on their own.

This is where correctly leveraging R&D tax relief claims can facilitate meaningful growth in R&D spending in the UK.

How can R&D tax relief claims be used to boost R&D spending?

It might seem like R&D tax relief claims are a product of R&D spending rather than a cause, but this misses the spirit of the programme.

The idea of R&D tax relief claims is that innovative businesses get a pool of money faster and more reliably than if they had to rely on selling the innovation and generating revenue.

This money, while technically the company’s to use as needed, is designed to be reinvested in R&D so that more advances and innovations can be found.

If a company is hesitant about R&D expenditure, then R&D tax relief claims could be a way to ease concern.

This is due to failed or aborted projects still having the ability to qualify for R&D tax relief claims, provided they meet HMRC’s criteria.

This should encourage businesses to be more liberal in their spending and ambitious with the projects they tackle, as they know that not all of the money will be lost should things go wrong.

Innovation is not a smooth road and R&D tax relief claims are designed to help pave the way for innovative businesses to flourish.

This is supported by the help of expert R&D tax consultants who can help maximise claims and defend eligible claims from enquiries.

We defend the full amount of eligible relief claimed on any legitimate claim submitted, so innovative businesses do not find themselves missing out.

While it is still too early to know how much R&D investment took place in 2025, we can begin looking forward to greater investment in 2026.

To get the new year started with expert support on R&D tax relief claims, be sure to speak to our team today!

Adam Bointon