Most would agree that innovation is a positive force. Indeed, innovation is the life-blood of British industry. But how do our business leaders and those on the front line really feel? Are they able to be as innovative as they'd like? Do they feel there are factors that are holding them back? What helps them innovate and grow?

To find out what’s going on throughout the boardrooms of the UK and in the heads of those in charge of R&D, we commissioned a report in conjunction with Management Today. The findings of the report, A Nation of Innovators – a ForrestBrown report on business attitudes to research and development are enlightening and may well shape the way companies view R&D and their approach to innovation in the future. Here are some of the key findings:

1. Financial barriers to innovation

A significant 68% of respondents said they believed their company faced barriers to innovation. Whilst many cited lack of time, talent or short term thinking as the main reason for this, 57% said that it was down to a lack of finances. Hold that thought for a moment…

2. A lack of understanding around R&D tax credit claims

It’s good to hear that 89% of the companies who responded to our survey say they plan to innovate in the next three years. However only 40% of them are planning to claim tax credits for their innovation work. This ‘claim gap’ is intriguing. It shows that awareness of what qualifies for R&D tax credits is really low or maybe that companies think it will be too time consuming and difficult a process to pursue.

3. Building awareness of R&D tax credits

It seems we have a challenge.  There’s clearly a need to develop a greater understanding of R&D tax credits so more companies can take advantage of them. R&D tax credits have been on the rise in the UK ever since their launch in 2000 but there’s still room for improvement – more work needs to be done to communicate the message about what work qualifies.  Hopefully a report like ‘A Nation of Innovators’ will go some way to achieving this.

4. Companies that do claim often get back more than they expect

Of those companies who have already claimed R&D tax credits, many were pleasantly surprised. In fact, our research shows that for 44% of respondents, the amount they received, either in the form of a cash payment and/or corporate tax reduction, was higher than they expected.

5. Tax credits are reported as important to 80% of recipients

For those who have claimed R&D tax credits, they’re an overwhelming success story, allowing innovation to continue and the company to grow. Just look at the figures; 39% directly increased their R&D activities, 47% were able to hire new staff and 24% reinvested the funds into new manufacturing processes, product development or setting up new offices.

6. Financial barriers to innovation are reduced or eliminated

Remember our first point? 57% of respondents said they were prevented from being as innovative as they wanted to be, due of lack of finances.  Yet for the companies that did claim, the amounts they received meant these financial barriers were either reduced or eliminated. Interesting….

So we’ve come full circle.  In fact we’ve created ‘a virtuous circle of innovation’. By increasing awareness of R&D tax claims, more companies will be able to benefit from them. In turn, the boost they receive will remove the financial barriers that have been standing in their way and they’ll be able to innovate to their heart’s content.

If you’d like to read more fascinating insights from our ‘A Nation of Innovators’ report, it’s available for you to download here.