Given that R&D tax reliefs are designed to increase innovation in the UK, a key measure of this success involves charting which sectors and regions benefit most from the scheme.
For accountants seeking to support innovative businesses, knowing where the gaps in claims are can be vital, as it suggests that innovation may be going unrewarded.
As such, we are going to break down the latest HM Revenue and Customs (HMRC) statistics to find out how innovation is changing in the UK.
Is UK R&D in decline?
Technically, there has been a slight dip in the value of R&D tax relief claims in the UK in the past year.
However, given that the value has only fallen by two per cent, it is not time to signal the demise of the scheme just yet.
There is a notable decline in R&D tax relief claims across many regions in the UK that could indicate a lack of confidence in those areas.
Wales saw the biggest drop in R&D tax relief claims with a 23.33 per cent fall compared to the previous year.
Less dramatically were the 17.86 per cent drop in R&D felt in the North East of England and a 17 per cent drop in Yorkshire.
In terms of sector-specific drops, water, sewage and waste saw the sharpest decline of 33.33 per cent, but a more surprising drop came in the form of the information and communication sector, which saw a 13.77 per cent decline.
How can these statistics shape approaches to R&D tax relief?
In areas and sectors where the value of R&D tax relief claims has fallen, it is worth trying to determine whether that drop is valid or if innovation is being missed.
It is also worth noting the areas where R&D does seem to be growing.
The West Midlands saw a 21.51 per cent growth, which outpaced the 14.04 per cent growth in East England and the 6.50 per cent growth in the South East.
Despite the slight dip in value, information and communication remains one of the big three sectors alongside professional, scientific and technical and manufacturing.
Recently expanding awareness of the ability for some businesses in the arts, entertainment and recreation sector to make claims has resulted in a 4.61 per cent increase, which could increase further once clearer guidelines are published later this year.
Ultimately, the statistics show the way in which R&D trends fluctuate in the country over time and can be a useful way to do targeted outreach to innovative clients.
If you work in areas where R&D tax relief claims have fallen, try to reach out to businesses to make sure they are not missing out on funds to which they are entitled.
Where R&D is thriving, take the opportunity to continue supporting innovative businesses and help them make the most of their R&D tax relief claims.
We are on hand to continue supporting innovation across the country and in every sector.
We know that innovation can occur in many different places and in many different ways, so we work to compile fully compliant, maximised R&D tax relief claims.
Wherever you are based and whatever sector you want to support, speak to our team today for expert R&D tax relief guidance.
