Businesses in Gloucestershire top the list for R&D (research and development) tax relief claims in the South West.

New data published for the first time by HMRC has revealed Gloucestershire businesses made 380 claims in 2015-16, followed by Devon on 230 and Wiltshire on 225. There were 210 claims by businesses in the Bristol area.

In total, businesses across the South West submitted 2,040 claims for tax relief for R&D expenses in 2015-16, claiming some £130m, a 17 per cent year on year rise in the number of claims and a 4 per cent rise in the value of claims.

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 - typically loss-making businesses.

The statistics are skewed in that the geographical analysis is based on companies' registered offices. As a result, London tops the leader board for the number of claims. It is also little surprise that over 40 per cent of claims in the capital are in the software and technology sector.

The South West takes sixth spot among the UK regions, with the largest number of claims being in the manufacturing sector (31 per cent of the total), followed by the information and communication sector (24 per cent), and the professional, scientific and technical sector in third place (20 per cent).

Commenting on the new statistics, Andrew Gordon, tax partner at RSM, the audit, tax and consulting firm in Bristol (pictured) said: "'While it is positive that overall R&D claim numbers across the South West continue to rise, it's not clear whether this is down to a large number of new businesses claiming, or whether it is those businesses late to the party in terms of making claims - we suspect it is the latter.

'The national figures show wide disparities between different sectors and different regions which is due in large part to ongoing lack of awareness of how the relief can apply.

'The truth is that many more companies are undertaking research and development work but they aren't recognising that this could be eligible for tax relief, despite the high levels of HMRC engagement and support through the R&D Consultative Committee and other measures.'