The latest UK budget announcement included a significant boost to the UK’s R&D tax credit scheme, with more funding being made available to innovative businesses.
The most eye-catching change is the addition of £2.3 billion to R&D investment by 2021. The regular R&D tax credit has also been raised from 11% to 12%, depending on the business size.
A further £500 million has been committed to researching and deploying artificial intelligence, as well as accelerating the rollout of 5G mobile technology and fibre-to-the-door broadband.
In total, the current Parliament has invested £7bn in R&D. This includes the £1.7bn Industrial Strategy Challenge Fund, which was specifically designed to work closely with businesses.
In line with earlier proposals, the UK’s seven existing research councils will be merged with Innovate UK into a single body, UK Research and Innovation (UKRI).
UKRI will allocate at least £6bn annually, with a focus on closing the current north/south divide in research funding, as well as facilitating more commercial research projects.
The boost to the UK’s research and development budget is timely, given recent concerns around EU funding. Universities have questioned the future of EU research grants after Brexit, while it is not yet clear whether the UK will still have access to the €30bn Horizon 2020 fund.
Chancellor Philip Hammond announced the changes as part of a suite of measures tailored to businesses. The VAT threshold for businesses will be frozen at £85,000 for two years, while business rates calculations will be reformed to better reflect retail inflation.
With many research focused businesses involved in international trade, the freezing of rates on short and long haul flights will also appeal, as will a tax hike exemption on diesel vans. Mandatory VAT registration for foreign sellers meanwhile should allow UK businesses to better compete online.
Accountancy in Europe (a UCI Ltd company) offers unparalleled support for UK businesses applying to receive R&D tax credits. For more information on the eligibility requirements, how R&D tax credits can help your business, or what we can do for you, visit AIE today.