West Midlands Records Growth in High-Reward R&D Spending to Reach £3.3 Billion
03/10/2023
North East Sees Biggest Fall in High-Reward R&D Spending
05/10/2023
Manchester, 29 September 2023 – Scottish business spending on the most valuable forms of innovation rose by 1.6%[1], according to analysis of new Government statistics by Ryan, a leading global tax services and software provider.
The data, released last week, is captured by HMRC and is based on claims made for research and development (R&D) tax relief, which reward businesses for qualifying innovation.
Expenditure on high-reward R&D grew in Scotland from £1.88 billion in 2020/21 to £1.91 billion in 2021/22.
Despite the growth in expenditure, the number of tax relief claims for R&D projects made by Scottish businesses dropped slightly from 4,575 claims to 4,550. In total, Scottish businesses claimed £335 million in R&D tax relief, with an average claim value of £73,626.
Total claims and spending by region in 2020/21 v 2021/22
| Region | Total claims 2020/21 | Total Expenditure 2020/21 (£ millions) | Total claims 2021/22 | Total expenditure 2021/22 (£ millions) | Change in claims | Change in expenditure |
| North East | 2,725 | 755 | 2,835 | 710 | 4% | -6% |
| East Midlands | 5,885 | 1,940 | 5,790 | 1,855 | -1.6% | -4.4% |
| East of England | 8,185 | 5,040 | 8,770 | 5,095 | 7.2% | 1.1% |
| Scotland | 4,575 | 1,875 | 4,550 | 1,905 | -0.6% | 1.6% |
| South West | 6,600 | 2,015 | 6,880 | 2,085 | 4.2% | 3.5% |
| Wales | 2,685 | 740 | 2,640 | 770 | -1.7% | 4.1% |
| London | 18,130 | 12,725 | 19,780 | 13,680 | 9.1% | 7.5% |
| Northern Ireland | 2,280 | 800 | 2,270 | 885 | -0.4% | 10.6% |
| South East | 12,520 | 7,645 | 13,260 | 8,640 | 5.9% | 13% |
| West Midlands | 7,335 | 2,865 | 7,430 | 3,335 | 1.3% | 16.4% |
| North West | 8,990 | 2,580 | 9,220 | 3,030 | 2.6% | 17.4% |
| Yorkshire and The Humber | 6,395 | 1,560 | 6,805 | 1,930 | 6.4% | 23.7% |
Overall, UK-wide innovation spending that qualifies for tax relief rose 8% to £44.1bn in 2021/22. However, the number of first-time claimants has fallen for the second year running.
R&D projects carried out by UK companies introduce new products and services to the marketplace, which play a critical role in economic growth as they attract investment, boost exports and lead to the creation of more skilled jobs.
R&D tax relief was introduced in 2000 to encourage and reward innovation and results in either a reduction in a limited company’s corporation tax bill or a cash lump sum for companies seeking to resolve a scientific or technological uncertainty.
Nigel Holmes, Director, Research and Development at Ryan, said:
“Innovation spending by Scottish businesses continues to grow and will be playing a big role in driving economic growth and employment.”
“While the number of businesses claiming for R&D tax relief did fall, it was just a small drop and can be easily improved in the coming years.”
“However, business leaders must not get complacent and should continue to do what they can to encourage research and development in Scotland, as this will lead to further inward investment and jobs creation.”