A Britain that is fit for the future
The UK government has announced its hotly anticipated budget for next year, including some good news for innovative companies. The overall theme of the Budget set out a long term vision for an economy that is fit for the future and one that is driven by innovation. To achieve this aim the Chancellor introduced a range of measures and tax reforms aimed at cultivating innovation and supporting businesses.
R&D Funding and rate increase
Philip Hammond insists the UK is on a technical journey, and backed that mantra up with an R&D tax credits and investment increase. Increasing the amount of R&D carried out by companies is a key part of the government’s aim to increase productivity and promote growth.
In his speech the Chancellor revealed “We are allocating a further £2.3 billion for investment in R&D and we’ll increase the main R&D tax credit from 11% to 12%”. This he explains, will take “the first strides towards the ambition of our industrial strategy to drive up R&D investment across the economy to 2.4% of GDP.” The increase will take affect from 1 January 2018 and is expected to have a positive impact on 4,000 business claiming RDEC.
Today’s announcement is welcome news firstly because it puts the UK amongst the most attractive schemes globally and secondly because the rate increase indicates that R&D Tax credits will remain for the long term. The Chancellor has been criticised by some businesses for gearing his focus towards RDEC which is claimed by large companies and not at the SME Relief scheme. It is the first time since the introduction of RDEC, that the two schemes have not been increased together. However, it is worth bearing in mind that RDEC is also available to SMEs that are currently in receipt of State Aid for their R&D through grants. And as SME relief is currently capped by EU State rules, it does leave space in the future post-Brexit Britain for the SME scheme to grow.
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