Businesses in Yorkshire & the Humber are 5% more likely to make claims for R&D tax relief than the average UK firm, the latest HMRC data shows.
Businesses in the region made 15.2 claims for R&D tax credits per 1,000 businesses in the latest year, according to analysis by innovation funding specialists Catax.
In comparison, 14.4 claims are made per 1,000 businesses in the UK on average, meaning Yorkshire & the Humber is outperforming the country by 5.3% when adjusted for business population.
In contrast to Yorkshire’s figures, the South West — the region with the lowest proportion of businesses claiming for innovation — made 11.5 claims per 1,000 companies.
This means businesses in Yorkshire & the Humber are 32.2% more likely to claim R&D tax credits compared with the South West.
However, Yorkshire & Humber businesses are making 10.3% fewer claims compared to the North East, the region making the most claims per 1,000 firms.
R&D projects play an important role in economic growth, as they attract inward investment, boost exports and lead to the creation of more skilled jobs locally.
On an absolute basis, the most claims were made in London with 17,210 followed by the South East with 12,740.
R&D tax relief was introduced by the government in 2000 to incentivise innovation, and results in either a reduction in a limited company’s corporation tax bill or a cash lump sum.
Many firms don’t realise the work they do qualifies as R&D, which is defined as any work that seeks to resolve a scientific or technological uncertainty, whether that’s a new process, product or service. Crucially, R&D work does not need to have been successful to qualify and claims can be made up to two years beyond the end of the tax year in which the work took place.
Mark Tighe, CEO of innovation funding specialists Catax, says: “When it comes to innovation, Yorkshire & Humber sits mid-table but it is still beating the national average and falls just 10% behind the North East, the UK leader for R&D claims.
“The region should not rest on its laurels though, as innovation is important for economic growth and the creation of more highly skilled jobs.
“These figures may suggest that businesses in Yorkshire & the Humber, especially SMEs, are carrying out R&D work without claiming for the valuable tax reliefs they are entitled to.
“Millions of companies have faced financial difficulties during the pandemic, and this is money that can create a virtuous circle of growth for both businesses and local economies.”
