New data shows R&D tax hotspots in Scotland

Dougy Agnew

Businesses based in the City of Edinburgh topped the league for the number of claims for R&D tax credits in 2016-17 at 425 claims, followed by Glasgow City on 335 and Aberdeen City on 250.

In total, businesses across Scotland submitted 1,900 R&D claims in 2016-17, claiming some £175m in tax relief. Compared to the data reported for the previous year published in February 2018, this represents a 50 per cent rise in the number of claims and a 6 per cent rise in the amounts claimed in R&D tax credits.

The largest number of claims across the region came from professional, scientific and technical companies (515) who collectively claimed £35m, followed by manufacturing firms (500) who claimed £45m, followed by information and communications businesses (425) who claimed £25m.

R&D tax credits are a tax relief designed to encourage greater R&D spending, leading in turn to greater investment in innovation. They work by either reducing a company’s liability to corporation tax or providing a cash injection for companies without a tax liability (i.e. loss-making businesses).

Commenting on the new numbers, Dougy Agnew, a tax partner at RSM in Aberdeen said: “Compared to the data released this time last year, the latest figures show a healthy rise in the numbers of applications for R&D tax credits, and higher payouts for Scotland-based businesses involved in R&D activity.

“While this is very encouraging, there are some sectors – construction in particular – where the numbers of claims are negligible, despite the likelihood that many are involved in R&D activity.

“The fact is there are many more businesses across Scotland that are undertaking R&D work but are missing out on the R&D tax credit payments to which they are entitled.”