R&D tax credits have been around for a number of years now. And they have helped businesses across the UK to boost their coffers. But it’s time to review and improve, according to a leading industry expert. LUMO are calling on the government to look long and hard at their strategy in relation to research and development. It has been shown to be a great use of public finance, supporting and encouraging companies to innovate.
With some degree of uncertainty in government at the moment, it is vitally important that those in power provide as much certainty as possible. Brexit is shrouded in uncertainty. And commerce needs to look beyond leaving the EU and to business as usual. The United Kingdom is seeing a reduction in investment as it is. Companies such as Nissan have put investment plans on the back burner while the details of a trade deal between the UK and the EU are thrashed out.
The Future of R&D Tax Credits
The system has served a purpose. Here at LUMO, we have helped clients regain millions of pounds that they have invested in research and development. But different times require different measures.
The system needs to be beefed up in many areas. The HMRC produces an annual report on R&D tax credits. And it makes interesting reading. If you don’t have the time, then we can sum it up for you.
We are far behind other countries in terms of government expenditure on R&D support. The stats show
- Germany spend over 3% of GDP on R&D
- Sweden, Denmark and Austria also top the 3% figure
- The UK government have set a target of 2.7% of GDP
- We currently languish on only 1.7% of GDP spent on R&D
These figures come into starker contrast when we consider that these countries will be direct competitors when Brexit happens.
We suggest a few measures that will boost this investment level and provide the UK with a more competitive standing in the years to come.
Increasing the enhanced rate from 130% to 150% would be a major step in the right direction.
Including new industries in R&D tax credits such as social sciences, where much great work is being carried out.
Looking at how the government can help with Intellectual Property (IP) and innovation. Companies need government help to protect their hard work and innovation.
With these extra measure sin place, we could see the investment in innovation jump to the kind of levels needed to compete with out European partners and businesses beyond the borders of the EU too.
Steps In The Right Direction
Although there is always more that can be done, the latest figures show that SME’s are taking up R&D tax credits in higher numbers than ever before. 77% of all claims are from SME’s and this has been a 22% increase over the last few years. In addition, 15% of the claims in the latest figures have come from first time claimants. This is very welcome news indeed.
LUMO are here to help businesses make the most from R&D tax credits. Whether you are a seasoned claimant or looking to do this for the first time, we are here to help you get the most from this incentive.