Spending on the most valuable forms of innovation by Yorkshire & Humber businesses fell by 10.6% to £1.5bn during the pandemic, according to government statistics published yesterday.
Despite the fall in spending, the number of tax relief claims for high-reward research and development (R&D) projects made by Yorkshire & Humber businesses increased in 2020/21, rising 9.2% from 6,070 claims to 6,630, analysis by innovation funding specialist Catax shows.
The data is captured by HMRC and is based on claims made for R&D tax credits, which reward businesses for qualifying activity. R&D tax relief was introduced in 2000 and results in either a reduction in a limited company’s corporation tax bill or a cash lump sum for businesses seeking to resolve a scientific or technological uncertainty.
R&D projects carried out by UK businesses 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.
Figures released by HMRC show that in Yorkshire & the Humber, spending on qualifying R&D fell by 10.6% from £1.6bn in 2019/20 to £1.5bn in 2020/21.
UK-wide innovation spending that qualifies for tax relief fell 11% to £38.1bn in 2020/21 — down from £42.8bn in 2019/20.
Mark Tighe, CEO of innovation funding specialist Catax, says: “The pandemic has caused a setback for innovation spending in Yorkshire & the Humber, but it is encouraging to see that more businesses are making claims for this type of high-reward R&D activity.
“This kind of innovation is of vital importance to local economies, as it helps businesses grow and creates even more skilled jobs.
“Businesses are already bouncing back from the pandemic and are innovating in earnest, which will kick-start an acceleration in R&D spend.”
