The Industrial Strategy ‘Investing in R&D to transform the UK economy’
As the Brexit date is fast approaching with no news on a post- Brexit deal yet, one thing that is certain is that once we have parted ways with the European Union the government will have research and development tax relief at the core of their new industrial strategy, released late last year.
In order to raise the standard of living in England, “our businesses need to revolutionise productivity in all sectors from construction and agriculture to manufacturing not forgetting the creative industries”- read the strategy.
Research and development has been offered as one of the main solutions to the problems released in 2017’s Autumn budget and the government have vowed that they will be ‘investing in R&D to transform our economy’. Considering that the proportion of the wealth that the UK spends on R&D has been stagnant for 15 years this is encouraging for businesses that perhaps wouldn’t have usually ventured out into spending on research and development finally getting the incentives and re-assurance that they need.
In the Industrial Strategy the government commit to reach 2.4 per cent of GDP investment in R&D by 2027 and to reach 3 per cent of GDP in the longer term, placing the UK in the top quartile of OECD countries. As a first step the government has already increased the rate of relief for large companies from 11% to 12%. It will also invest an additional £2.3bn over what was previously planned in 2021/22, raising total public investment in R&D to approximately £12.5bn in that year alone. Meaning that institutes who already practice research and development and innovation clusters of some of the worlds most talented engineers will have more scope to solve problems the everyday person suffers with, or maybe make the next breakthrough discovery in medicine.
Break the stigma surrounding R&D tax relief
The strategy doesn’t just focus on large corporations either, it details how smaller companies and SMEs have not been forgotten, stating that in this segment of businesses there is a need for a different approach when creating exposure around the scheme. SME’s beliefs around research and development tax credits need to be altered. There is a stigma that comes along with making an R&D tax claim which is putting off smaller businesses with getting involved. There are over 5.5 million small businesses across the country which give the UK, ‘extraordinary vibrancy and resilience’, in the chancellor’s own words, and it would be a shame for the UK to miss out on their engineering abilities and problem-solving skills because of lack of funding.
If you know a business or business owner who is carrying out research and development but is wary about the complexity of the R&D Tax Claim show them this article or get in touch here. There is lots of funding to be claimed back out there and the engineering possibilities are extraordinary when we all work together.