North East Sees Biggest Fall in High-Reward R&D Spending

18 October 2023

North East business spending on the most valuable forms of innovation has fallen more than any other region of the UK[1], according to analysis of new Government statistics by Ryan, a leading global tax services and software provider.

Expenditure on high-reward research and development (R&D) fell in the region by 6% from £755 million in 2020/21 to £710 million in 2021/22.

The data, released last week, is captured by HMRC and is based on claims made for R&D tax relief, which reward businesses for qualifying activity.

Despite the fall in spending, the number of tax relief claims for R&D projects made by North East businesses increased by 4% to 2,835 claims. In total, North East businesses claimed £140 million in R&D tax relief, with an average claim value of £49,382.

Total claims and spending by region in 2020/21 v 2021/22

Region Total claims 2020/21 Total Expenditure 2020/21 (£ millions) Total claims 2021/22 Total expenditure 2021/22 (£ millions) Change in claims Change in expenditure
North East 2,725 755 2,835 710 4% -6%
East Midlands 5,885 1,940 5,790 1,855 -1.6% -4.4%
East of England 8,185 5,040 8,770 5,095 7.2% 1.1%
Scotland 4,575 1,875 4,550 1,905 -0.6% 1.6%
South West 6,600 2,015 6,880 2,085 4.2% 3.5%
Wales 2,685 740 2,640 770 -1.7% 4.1%
London 18,130 12,725 19,780 13,680 9.1% 7.5%
Northern Ireland 2,280 800 2,270 885 -0.4% 10.6%
South East 12,520 7,645 13,260 8,640 5.9% 13%
West Midlands 7,335 2,865 7,430 3,335 1.3% 16.4%
North West 8,990 2,580 9,220 3,030 2.6% 17.4%
Yorkshire and The Humber 6,395 1,560 6,805 1,930 6.4% 23.7%


Overall, UK-wide innovation spending that qualifies for tax relief rose 8% to £44.1bn in 2021/22. However, the number of first-time claimants has fallen for the second year running.

R&D projects carried out by UK companies 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.

R&D tax relief was introduced in 2000 to encourage and reward innovation and results in either a reduction in a limited company’s corporation tax bill or a cash lump sum for companies seeking to resolve a scientific or technological uncertainty.

Nigel Holmes, Director, Research and Development at Ryan, said:

“While business spending on R&D has bounced back quickly from the pandemic, the North East lags behind the rest of the country.”

“Unlocking more innovation is critical for driving economic growth and employment, and so it is important that North East business leaders do what they can to encourage research and development in their region.”

“However, the growth in the number of businesses in the region making claims for R&D tax relief overall does bode well for the future.”


1Research and Development Tax Credits Statistics: September 2023

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