The Brexit vote sparked ‘huge uncertainty’ – but Manchester firms are ‘doing the right thing by investing for the future’
Manchester’s biggest firms have seen their share of UK innovation jump 12.1% since the Brexit vote amid a massive rise in R&D spending, new analysis has revealed.
Greater Manchester’s largest employers accounted for £1 in every £151 clawed back nationwide in R&D tax relief in the latest year, compared with £1 in every £169 two years earlier in 2016/17.
The analysis also showed that the number of claims being made by Manchester’s largest employers has risen by 27.8% over the same period, giving a “strong indication” that the region is primed to play a “crucial role” in post-Brexit Britain’s economic success.
The total amount spent by all Manchester-registered companies on qualifying R&D leapt 50.8% from £620m to £935m, according to analysis by R&D tax experts Catax, which assists larger companies with tax relief claims under the R&D expenditure credit (RDEC) scheme.
That compares to a national rise of 42.7% in overall R&D spending, climbing from £24.6bn to £35.1bn in the latest available year – 2018/19.
Catax carried out its analysis by comparing claims made by large companies under the Government’s R&D expenditure credit (RDEC) scheme with the total amount claimed by UK companies of all sizes.
RDEC is the scheme larger businesses use to claim tax credits on qualifying innovation, and they are typically the biggest employers.
Richard Armstrong, head of RDEC at Catax, said: “Manchester continues to drive forward with innovation and it looks like the whole country is following suit.
“The Brexit vote sparked huge uncertainty but these businesses are doing the right thing by investing for the future. The entire region’s economic security, labour market and the UK’s wider prosperity will depend on it.
“Expect this to pay dividends in the years to come now we’re out of the EU and making trade deals with some of the most important global economies. The UK has to continue to take the fight to the rest of the world.
“Thousands of companies have faced financial difficulties in the past year but many don’t claim the tax credits they’re entitled to, and large companies aren’t immune from underclaiming.”
RDEC rewards companies seeking to resolve a scientific or technological uncertainty – through new process, product or service.
Catax said R&D work does not need to have been successful to qualify, and can result in either a reduction in a limited company’s corporation tax bill or a cash lump sum.
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