The Chancellor delivered his first Spring Statement yesterday following the move of the annual budget to the Autumn. As such, no major announcements were expected, and that is what we got. However, it was clear that Research and Development (R&D) is high up on the political agenda.
As well as championing the UK’s technology sector and “planning to unleash creators, innovators, investors and discoverers”, Mr Hammond reiterated support for the National Productivity Fund (a £31bn fund for infrastructure, R&D and housing) and the Modern Industrial Strategy, released earlier this year, that includes investment in R&D as one of its key pillars.
This shows that support for R&D investment, especially with Brexit on the horizon, shows no sign of reducing and if anything is likely to keep increasing.
One of the biggest areas of support that has almost doubled in size in recent years is the tax system, and, if applied for with the help of experienced advisors, it is also one of the easiest ways to fund R&D. R&D tax relief and credits provide c£2.9bn of funding to UK businesses each year, including both profitable and loss making companies of all sizes. At present it provides cash savings and payments covering almost 10% of R&D costs for large businesses and 25% to 33.3% for SMEs.
Surprisingly the relief is still under utilised, with many eligible businesses not claiming either due to lack of awareness or through a perception that it is too much hassle to claim.
Alastair Wilson, Tax Partner at Tait Walker, commented: “It is encouraging for the North East as a whole that the Government have a continued focus on innovation, R&D and their industrial strategy. Whilst we weren’t expecting any tax changes, and we didn’t get any, the reaffirmation that the Government see investment in manufacturing, innovation and R&D is good news for the UK economy as a whole and also the North East region.”
With thanks to author Tom Byng, from member firm MHA MacIntyre Hudson