Which UK cities are the most innovative?

British engineering and manufacturing firm Geomiq recently carried out a piece of research to identify the most innovative cities in the UK. The 2019 study examined over 48,000 data points from the two years prior to find which cities in the UK requested the most prototypes for inventions. It concluded that Manchester sits at number 1 with 13,695 prototype requests, followed by London and Bristol with 9,301 and 7,712 respectively.

Perhaps unsurprisingly it was the particularly highly populace cities that showed themselves to be the most innovative, with numbers as follows:

Manchester - 13,695

London - 9,301

Bristol - 7,712

Birmingham - 6,207

Edinburgh - 3,337

The research also revealed that in terms of industries, the most innovative UK sectors themselves include:

• Manufacturing
• Data
• Artificial Intelligence
• Health
• Internet of Things
• Machine learning
• Virtual Reality

Why do cities tend to be so innovative?

Cities by their very nature are ‘living and breathing’ in that they grow and evolve quickly.

Urban areas are expected to increase community cohesion, offer a better standard of living and boost a sense of wellbeing all against a background of sustainable development. In order to remain the attractive places to live and work that they are, people and businesses need to constantly innovate and grow. Public and private sectors of cities tend to also support the design and development of cutting-edge solutions together. These solutions particularly involve those that maintain their competitive edge, including start-ups, scientific research institutions and academia.

All cities tend to have the same kinds of innovation in common

Broadly speaking these can be divided into four main necessities:

Socially-minded innovation: Only by getting a city’s residents on board with innovation can it truly succeed. From rubbish and recycling issues to smart traffic lights, innovations in public services, governance and technology are continually evolving to shape the behaviour and improve the lives of the people who live there. Innovations should be centred round the needs of all citizens too, particularly taking into account different age groups, those with disabilities and the socio-economic factors.

Sharing space: Cities are crowded, so much of the innovation that goes on looks at how best to use the space available to maximum effect. Parking space for instance is at a premium, with many individuals and businesses renting out a driveway or concreted area that’s close to amenities. Schools also rent out space for events during evenings and weekends, whilst Airbnb thrives in cities as people rent out unused private homes.

Small-scale infrastructure: Cities obviously have a lot of larger scale infrastructure projects on the go at any one time, but smaller scale infrastructure projects are also innovative. From community projects and park facilities to bike hire and cycle lanes, small-scale projects can have a huge impact on urban environments.

Smoothing out peaks in energy: Around 20% of resources like water and electricity are always kept as surplus so that there’s capacity to cope with peaks in demand. Smoothing out these peaks with innovative pricing structures and technology-enabled demand management can drastically reduce this inefficiency and limit the burden on resources.

This all means that innovation has long been part of the fabric of modern city life, and why it’s essential that this remains the case going forward.

How R&D Tax Credits can help finance innovation across all sectors

Although many companies still haven’t heard of it, the R&D Tax Credits scheme has actually been around since the early 2000s. Essentially it’s a UK government tax scheme that works to reward and incentivise innovation across the private sector. It does this by covering a large number of research and development costs (up to 33 pence in every £1 in fact) that have occurred during the previous two financial years.

In general terms, how much a company will receive depends on the nature of the R&D expenditure, the size of the company and whether it has previously benefitted from state aid. There a few scenarios that affect how the claim value is calculated, depending on whether the claim is made using the SME scheme or RDEC.

If the company making the claim is profitable, the R&D costs can be used to slash its Corporation Tax liability. However, those recording a loss can receive the benefit as a cash lump sum instead.

Why is a programme of innovation so important for businesses and what kinds of projects can be eligible for the relief?

Research and development plays a crucial role in keeping businesses competitive. Without an R&D strategy in place, an organisation runs a strong risk of merely standing still, leading to difficulties in thriving within the market. The R&D Tax Credit scheme provides access to much needed funding, which can then be reinvested into further innovative work.

Businesses are most likely to be eligible for the relief if they meet the following conditions;

• They are based in the UK
• They are a limited company which is subject to Corporation Tax
• They have spent money specifically on R&D projects

What kind of costs can be covered by R&D Tax Credits?

The R&D Tax Credits scheme is a highly generous one, and any UK company of any size and in any sector is able to apply.

These are some of the key costs which can be included in a company’s R&D tax relief claim:

• Staffing costs, including staff wages and subtracted R&D
• Certain overheads used up in the R&D process like light and water
• Externally Provided Workers (EPWs)
• Investment in materials
• Certain software development costs
• Payments made to volunteers for clinical trials

You may well find our recent Tax Cloud blog What Costs Can You Claim Through R&D Tax Credits useful here.

Sound relevant to your company?

Our website offers a wealth of information about R&D tax relief or you can call us on 0207 118 6045. Alternatively send us a message and we’ll get back to you.

Myriad Associates consists of a broad mix of R&D accountants and specialists who deal with R&D tax relief claims. Although the application process is notoriously complex, we know exactly how to avoid the pitfalls and get your business the money it’s owed.

Our team is highly trained and experienced and can guide you through your claim from beginning to end - so whatever your query get in touch and we’ll be pleased to assist you.