Milton Keynes biggest firms see share of innovation shrink 15% since Brexit vote

This tax expert believes that MK businesses are doing the right thing by investing in the future.

By The Newsroom
Friday, 17th September 2021, 11:44 am
Updated Friday, 17th September 2021, 1:42 pm

Milton Keynes’ biggest firms have seen their share of UK innovation fall 14.6% since the Brexit vote despite a huge rise in R&D spending across companies of all sizes both nationally and locally.

Milton Keynes’ largest employers accounted for £1 in every £263 clawed back nationwide in R&D tax relief1 in the latest year, compared with £1 in every £227 two years earlier.

New Analysis from tax consultancy group, Catax, show innovation has dropped since 2016.

innovation is down among Milton Keynes' biggest firms by 15%

The total amount spent by all Milton Keynes-registered companies on qualifying R&D leapt 50% from £220m to £330m, according to Catax's analysis.

This compares to a national rise of only 42.7% in overall R&D spending — climbing from £24.6bn to £35.1bn in the latest available year (2018/19)2 — and late claims for Milton Keynes could still theoretically improve this data.

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.

RDEC rewards companies seeking to resolve a scientific or technological uncertainty, whether that’s a new process, product or service.

Crucially, 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.

Richard Armstrong, head of RDEC at specialist R&D tax consultancy Catax, said: “Although Milton Keynes’ share of innovation has fallen, the town’s firms continued to increase their expenditure on R&D.

“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.”