Autumn Budget – R&D Tax Credits and Investment
In this week’s budget, the government announced it would increase the Research & Development Expenditure Credit (RDEC) rate from 11% to 12% effective from 1st January 2018, making the new after-tax benefit 9.7% for large companies. Whilst some SME’s have expressed their disappointment that the already generous SME scheme (up to 33%) has not also been increased, SME’s across the UK will still benefit in specific circumstances where they are able to claim via the RDEC scheme.
It is also very positive that the Government continues to invest in R&D with the National Productivity Investment Fund (NPIF) being increased to £31 billion and R&D being one of the key areas this money is targeted at.
The largest boost to R&D support for 40 years with a further £2.3 billion investment from the National Productivity Investment Fund in 2021-22
A key focus in Chancellor Phillip Hammond’s budget speech this week was on a future of change, challenges and new opportunities. The Autumn Budget Policy Paper sets out actions for an economy driven by innovation that will establish the UK as a world leader in new technologies such as artificial intelligence (AI), immersive technology, driverless cars, life sciences and FinTech.
National Productivity Investment Fund (£ million) (1) – Research and Development funding
2017-18: 425
2018-19: 820
2019-20: 1,500
2020-21: 2,000
2021-22: 2,345
The budget policy paper states that this increased funding, the Budget and the modern Industrial Strategy together set out the next steps in the government’s plan to build an economy fit for the future. This includes:
Long-term support for science and innovation
The Budget introduces further ground-breaking approaches to regulatory frameworks for AI and driverless cars, in order to attract the world’s most innovative companies.
It confirms that the £4.7 billion NPIF investment in science and innovation announced at Autumn Statement 2016 will grow by a further £2.3 billion of additional spending in 2021-22, taking total direct R&D spending to £12.5 billion per annum by 2021-22.
Backing innovators and investing in R&D
The government has already committed to the biggest increase in R&D spending by any government in the last 40 years. The Budget invests a further £2.3 billion in R&D in 2021‑22 from the NPIF, and increases the rate of Research & Development Expenditure Credit from 11% to 12% with effect from 1 January 2018. This increase in the R&D Tax Credits scheme for large companies proposes to provide businesses with the confidence to make R&D investment decisions. The government will also introduce a new Advanced Clearance Service for RDEC claims.
The Budget policy paper states these plans demonstrate clear progress towards the government’s ambition to raise the level of investment in R&D in the economy to 2.4% of GDP. This means that, based on current forecasts, total support for R&D will increase by a third by 2021-2246.
Whether you’re a SME or a large company, R&D Funding Group can help your business claim R&D Tax Credits and ensure your return is maximised to its full potential. Call Stephen Dyson today for a confidential, no-obligation consultation on 0161 464 6351 or email sdyson@rdfunding.co.uk.
Source: Policy Paper – Autumn Budget 2017, published 22nd November 2017