The cost of R&D tax reliefs has grown by 241% over the last four years to reach £9.3 billion in 2020–21 (Figure 1). In 2019, UK companies claimed tax relief on £47.5 billion of R&D spending; 83% more than the Office for National Statistics’ (ONS) estimate of privately financed business R&D spending in the UK. HM Treasury has said that while this gap is partly explained by companies being able to claim tax relief for activity taking 16 Q 70, HM Treasury, Budget 2021, Protecting the jobs and livelihoods of the British people, 3 March 2021, HC 1226, para 2.61 17 Qq 72, 78–79 18 Note from the HM Revenue & Customs, received 22 December 2021. 19 Qq 100, 144, 149 20 Written Evidence HMP0004-Tax Watch, para 63 21 Written Evidence HMP0002- Association of Accounting Technicians, para 2.3, 3.34 22 Qq 140–142 23 C&AG’s Report, para 18, 4.28 12 HMRC Performance in 2020–21 place overseas, this does not account for the full difference. The difference was also much smaller in 2015, when spending claimed for R&D reliefs had been 35% higher than ONS’s estimate.24 Figure 1 Cost of R&D tax reliefs Year Expenditure £m (Note 1) % change since 2016–17 2016–17 2,737 – 2017–18 2,879 5% 2018–19 4,866 78% 2019–20 8,770 220% 2020–21 9,325 241% NOTES Expenditure is the total for the two R&D schemes. Source: HMRC, Annual Report & Accounts, 2016–17, 2017–18, 2018–19, 2019–20 and 2020–21