There was a lot to untangle from Chancellor Rishi Sunak’s highly anticipated Spring budget statement, whilst the headline act being the cost-of-living crisis, there were plenty of other proposals highlighted, particularly the changes to the research and development (R&D) tax credit initiative to help advance UK innovation, productivity, growth, and wages.
Despite already spending heavily on tax reliefs, the UK is currently spending less than half of the OECD (Organisation for Economic Co-operation and Development) average on R&D. Chancellor Rishi Sunak will be hoping his latest set of proposals will change that.
Following on from the Chancellor’s commitment in the 2021 Autumn budget, he dubbed a “new culture of enterprise” and reiterated his desire to improve the UK’s global footprint in science and innovation in order to remain competitive. He helped prove this by expanding the R&D tax credit scheme to cover data, cloud computing and pure maths, as well as the introduction of the super-deduction, a scheme that allows companies to cut their tax bill by up to 25p for every £1 they invest.
By expanding the R&D tax credit scheme, and encouraging UK businesses to take advantage of it, it is hoped that the economy will be boosted by an increased investment in science and technology, whether that be through creating new technologies and services, improving technologies and services, or by increasing staff count.
In addition to the Spring Statement, the chancellor also published a new tax plan highlighting how the government intend to reduce taxes over the remainder of this Parliament, as well offering incentives to encourage business investment into three key areas; capital, people and ideas.
Whilst the government has shown great initiative to support R&D, particularly with the expansion of the R&D tax credit, there is still more they can be doing.
A recent survey of TechUk members highlighted that increasing support for R&D would help the industry and encourage them to invest in the UK rather than relocating or setting up elsewhere.
Tech companies have cited several barriers that are hindering them from meeting their R&D objectives. Among these are:
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