R&D Tax Credit Reforms Are Stifling UK Innovation: Latest Research Surveying 254 SME CFOs Reveals

62% of UK SMEs have reduced investment in R&D as a result of reforms to the R&D tax credit scheme, reveals a new study by RCK Partners.
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RCK Partners conducts the first primary research of its kind via an independent, comprehensive study into the impact of recent R&D tax relief reforms on UK SMEs. Have R&D Tax Relief Reforms Gone Too Far? New research reveals reforms HMRC introduced to stop abuse of the R&D tax relief scheme have driven genuine innovators to cancel research, shelve projects and shed skilled staff amid increased uncertainty.

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Featured by: 

· The Times

· Business Matters

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R&D tax credit scheme reforms: Survey methodology

The research was commissioned by RCK Partners and conducted by Censuswide, among a sample of 254 CFOs of R&D active UK SMEs that have claimed or considered claiming R&D tax relief in the last 5 years. The data was collected between 01.07.2026 -07.07.2026. Censuswide is a member of the Market Research Society (MRS) and the British Polling Council (BPC), and a signatory of the Global Data Quality Pledge. It adheres to the MRS Code of Conduct and ESOMAR principles.

London, UK, 21July 2026 – Reforms to the UK's R&D tax relief scheme, introduced to stamp out widespread fraud and error, are suppressing the very innovation they were designed to protect, according to the first research of its kind undertaken since the reforms. More than six in ten (62%) finance chiefs say they have reduced their investment in research and development (R&D) as a direct result of the reforms, suggesting a clampdown that has overshot, deterring legitimate innovators as well as the bad actors it was meant to catch.

A survey of 254 chief financial officers at R&D-active UK SMEs, carried out by R&D tax advisory firm, RCK Partners, found the changes have pushed companies to cut research and lose skilled staff. As a direct result of the reforms, more than a third (35%) have hired fewer R&D or technical staff than planned, almost three in ten (29%) have delayed projects, and one in five (20%) have cancelled R&D projects outright.

The human and economic costs are substantial. Delays or uncertainty in receiving R&D tax relief payments have led three in ten (30%) firms to make redundancies or leave posts unfilled. The same proportion have taken out loans to plug the gap, while a quarter (26%) have drawn on the personal funds of the business's leaders.

Lord Philip Hammond, Chair of the Board of Directors at RCK Partners, said: "Innovative small businesses are the backbone of the British economy and the source of the growth we so badly need. That a scheme meant to back them is instead driving them to cut research and skilled jobs should worry anyone who cares about Britain's future prosperity."

The changes, phased in from 2023, merged the previous SME and large-company schemes into a single, less generous regime, introduced onerous Advance Notification requirements for many claimants, restricted relief for R&D carried out overseas and sharply increased HMRC compliance checks on claims.

Firms that have faced an HMRC enquiry into a R&D relief claim waited almost four months on average for a substantive update, with six in ten (59%) waiting between four and six months. The uncertainty has left the relief impossible to count on: 72%of finance chiefs say the time HMRC takes to process and pay claims makes it too unreliable to factor into their financial planning. Seven in ten (70%) said that in the last five years, HMRC has paid out an R&D tax relief claim to their business and later opened a compliance check seeking to reduce or recover that relief.

Rufus Meakin, Senior Advisor and Brand Ambassador to RCK Partners, said: “For more than twenty years, Britain deliberately gave its small and medium sized businesses more support, because successive governments recognised they face the greatest barriers to innovation and benefit most from help. In 2023, that principle was substantially weakened, with support for many SMEs more than halved. This research suggests those unintended consequences are now becoming clear. As policymakers continue to evaluate the effectiveness of the regime, they should consider whether the level of support given to SMEs is conducive to their ability to grow and innovate.”

The reforms have also failed to deliver one of the Government’s chief aims: new restrictions on overseas R&D costs were intended to bring research back to the UK. Instead, just 5% of affected firms surveyed have relocated work to the UK, while 48% have abandoned their claims altogether and kept their operations abroad. Firms that stayed overseas say the cut to relief rates made bringing work home uneconomic(32%), while others cite lower overseas cost and talent advantages as outweighing the relief now on offer.

Larger SMEs have been hit hardest: as a result of the reforms, among firms with 250 to 499 staff, almost half (45%) have decided not to submit a claim at all, double the average (23%).  

A note from Founder & President, Peter Roscoe:  

“This piece of research echo's the experiences on our clients. At RCK, we're proud to lead this important conversation on behalf of our clients and the wider UK innovation community.”  

If you would like to discuss the findings of the research or the article itself, please do get in touch.
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FAQs:  

What are the latest reforms to the UK's R&D tax relief scheme?

There have been a number of reforms to the R&D tax credit scheme in recent years, some of which are explained below.

Claim Notification Form (CNF):

· These include the introduction of a CNF which needs to be submitted to notify HMRC of your intent to claim. The CNF includes basic information, the person responsible, and a summary of the high-level R&D projects a business plans to claim for. For claims attributed to accounting periods beginning on or after 1 April 2023, claimants are required to notify HMRC within six months of their accounting period end. Failing to meet the forward notification requirement could affect a company’s eligibility to claim.  

Additional Information Form (AIF):

· Introduced by HMRC for claims made from 2023, the AIF isa mandatory online form that must be submitted before or at the same time as R&D tax relief claim via the company's CT600 Corporation Tax return which must be submitted correctly for a successful claim. This was introduced to tackle error and fraud and in an aim to improve the quality of claims submitted.

Reduction in the rates:

· The rates available to SMEs has been cut. Before April 2023, a loss-making SME could receive up to 33.35% of qualifying R& as a cash credit. After April 2023, the rate fell to approximately 18.6% for non-R&D-intensive SMEs.

Increase in the number of claims enquired:  

· HMRC have opened enquiries into more R&D tax credit claims than before.  

How have the R&D tax relief reforms affected UK SMEs?

According commissioned by RCK Partners, 62% of CFOs at R&D-active UK SMEs say they have reduced investment in research and development as a direct result of the reforms. Many businesses have also delayed projects, reduced hiring plans, or cancelled R&D activities altogether.

Are HMRC compliance checks affecting business growth?

According to research commissioned by RCK Partners the survey suggests that they have been. Businesses reported delaying projects, reducing recruitment, taking out loans, and leaving vacancies unfilled while waiting for claims to be reviewed or paid. For some SMEs, 29% have relied on directors' personal funds to bridge the gap in payment.  

Has R&D investment decreased following the reforms?

Yes. RCK Partners' survey of UK SME CFOs found that almost two-thirds (62%) of businesses have reduced investment in research and development since the reforms were introduced.  

What impact have the R&D tax credit scheme had on R&D jobs?

The research found that 35% of SMEs hired fewer R&D or technical staff than planned because of the reforms. In addition, 30% said delays or uncertainty around R&D tax relief payments had contributed to redundancies or unfilled positions.

Which businesses have been most affected by the R&D tax relief changes?

According to research commissioned by RCK Partners, larger SMEs appear to have been particularly impacted. Among surveyed businesses with 250 to 499 employees, 45% said they had decided not to submit an R&D tax relief claim following the reforms, significantly higher than the overall average.

How reliable is R&D tax relief for CFOs financial planning in the UK?

Many finance leaders believe the scheme has become less predictable. According to a survey by RCK Partners, 72% of CFOs said HMRC's claim processing and payment timelines make R&D tax relief too unreliable to factor confidently into financial planning.

Who conducted the research on the impact of the R&D tax relief reforms?

The research was conducted by Censuswide on behalf of RCK Partners. The survey included 254 CFOs from R&D-active UK SMEs that had claimed or considered claiming R&D tax relief within the previous five years. The primary research was carried out between 1^st July 2026 and 7^th July 2026. Censuswide is a member of the Market Research Society (MRS) and the British Polling Council(BPC), and a signatory of the Global Data Quality Pledge. It adheres to the MRS Code of Conduct and ESOMAR principles.