Aberdeen, Edinburgh and Dundee companies are leading the way with innovation, topping a newly released league table showing R&D (research and development) tax relief claims made across Scotland’s 32 local authority areas.
The break-down in figures, produced by R&D tax relief specialist Jumpstart, is based on the most recent 2015-16 claim statistics produced by HMRC in relation to the number of enterprises in each Scottish local authority area (see FIGURE 1 below).
According to Jumpstart, the figures are a positive indicator that the oil and gas sector, which continues to dominate Aberdeen’s economy, have been investing in innovation during the current downturn. Jumpstart has, however, raised concerns that many industry sectors in rural-based areas of Scotland are missing out on securing R&D tax breaks for which they could be eligible.
The Granite City topped the HMRC list with 180 successful R&D tax relief claims, representing 1.85 per cent of its businesses. Edinburgh was second with 1.47 per cent of local companies securing relief through 290 claims, while Dundee was third (50 claims, 1.30% of local businesses), reflecting its strong life sciences sector. Glasgow was ranked fourth (225 claims, 1.15% of local businesses), ahead of Midlothian (25 claims, 0.97% of local businesses), also an area with a thriving life sciences sector.
Four rural areas prop up the bottom end of the table: Highland (0.26% of local businesses), Argyll & Bute, Angus (both 0.24%) and Dumfries & Galloway, where just 0.15 per cent of its local enterprises secured R&D tax relief. The figures used to compile the table are rounded up to the nearest five claims, meaning a number of smaller and, in some cases, remote local authority areas including Orkney, Shetland and the Western Isles did not make the list.
Commenting on the figures, Scott Henderson, Managing Director at Jumpstart said: “These new figures, based on the most recent HMRC statistics and the number of local businesses in each of Scotland’s 32 local authority areas, provide us with a national league table for innovation.
“Aberdeen’s table-topping performance is a positive sign, indicating how a number of oil and gas sector businesses are promoting innovation despite facing real challenges due to a low crude price. We know from the work we do with many energy firms in the North East that there is a real focus on improving operational processes to enhance competitiveness. The further incentive offered by R&D tax relief has been helpful in supporting that drive.
“It’s perhaps not surprising to see Edinburgh near the top of the list with its strong technology, financial and biotechnology sectors. The strength of the life sciences and biotechnology in Dundee and Midlothian has also played a key part in their high rankings on the table.
“Rural local authority areas make up the bottom end of the table, suggesting there is un-tapped potential for businesses in agriculture and food and drink production to secure greater R&D tax relief benefits for investing in innovation. Innovation does not have to involve people in white coats, working in laboratories. All types of sectors, including those which are commonly found in Scotland’s rural areas, may also be eligible to claim for tax relief for the work they are doing to enhance their business processes.
“Last year spending on business R&D in Scotland topped £1bn for the first time ever, underlining the growing importance of R&D tax relief to more and more companies. While this innovation league table highlights the fact that areas with strong energy, life sciences and tech sectors are doing well in securing R&D tax relief, companies in rural parts of Scotland might be missing out.”