East Midlands businesses claimed £330 million in research and development (R&D) tax relief for the 20/21 financial year, according to HMRC’s latest R&D tax credit statistics, analysed by tax relief specialist Access2Funding, a Ryan company.
In the East Midlands, despite business spending on R&D dropping by 10%, from £2bn to £1.8bn, there was an 8% increase in the number of claims made, from 5,595 in 19/20 to 6,045 in 20/21.
The majority of claims were made by SMEs (5,410), with 9% more claims made under the SME scheme in the East Midlands, and SMEs spending 7% more on R&D activities than the previous year.
The average R&D tax credits claim in the East Midlands was worth just under £55,000, a decrease of £5,000.
According to the report, the highest number of R&D claims were made by businesses in the Information and Communication (22%), Manufacturing (21%) and Professional, Scientific and Technical (19%) sectors.
Nigel Holmes, Director of Tax at Ryan, said: “It’s refreshing to see how the East Midlands has maintained steady momentum during the Covid-19 pandemic, with more businesses making an R&D claim.
“SMEs have particularly weathered the storm, with 9% more SMEs claiming in 20/21 than 19/20 – reflecting the resilience of the region’s businesses and their ability to adapt and overcome by significantly accelerating the pace at which they innovate.
“As with the UK’s current financial pressures, R&D tax relief can help offset other rising costs and help stabilise future business growth, and the East Midlands has shown it’s in a great position to continue to go up against anything that is thrown at it and ensure that R&D is at the heart of a successful economy.”
The average claim value across the UK is sitting at approximately £74,000, or £54,000 for SMEs. There has been a 7% increase in the provisional estimated amount of claims made compared to last year, from 85,900 to 89,300, driven by a 7% rise in the number of R&D claims made by SMEs.
Tax relief specialist Access2Funding is supports businesses across the UK with accessing innovation tax relief and in 2021 helped return a total of £17 million to businesses.