{"id":4400,"date":"2021-11-03T11:25:32","date_gmt":"2021-11-03T11:25:32","guid":{"rendered":"https:\/\/www.goodmanjones.com\/blog\/?p=4400"},"modified":"2021-11-04T10:21:43","modified_gmt":"2021-11-04T10:21:43","slug":"research-development-whats-the-situation-post-autumn-budget-2021","status":"publish","type":"post","link":"https:\/\/www.goodmanjones.com\/blog\/research-development-whats-the-situation-post-autumn-budget-2021\/","title":{"rendered":"Research & Development: What’s the situation post Autumn Budget 2021?"},"content":{"rendered":"

Innovation and R&D<\/a> were a key focus for the Chancellor’s Autumn statement as the government fully recognises the importance of innovation to economic growth and future competitiveness.<\/p>\n

The government pledged \u00a320billion in R&D by 2024-25, a 25% increase and ‘record investment’, growing R&D spending by \u00a322billion by 2026-27.\u00a0 This is in line with their goal to increase it to 2.4% of GDP by 2027, well above the latest OECD<\/a> (Organisation for Economic Co-operation and Development) average of 0.7%.<\/p>\n

Reforming R&D Tax Credits<\/h2>\n

Following the consultation period launched in the Spring Budget 2021, more details have been released regarding the anticipated reform to R&D tax relief rules.\u00a0 As speculated, the scope of qualifying R&D tax relief will now be expanded to cover cloud and computing data.<\/p>\n

A welcome improvement, this ensures that investment in R&D expenditure can better reflect ‘modern research methods’.\u00a0 According to Julian David of TechUK<\/a>, SMEs using this technology can potentially increase annual turnover by \u00a3250k.<\/p>\n

Further plans to improve compliance within the scheme are still to be addressed, with more news expected later this year.<\/p>\n

R&D in the UK<\/h2>\n

in a further bid to cement the UK as a ‘science and technology’ superpower, the government will also look to ensure that UK based innovations are rewarded as a priority.\u00a0 This is in an effort to bring the scheme more in line with those operating in countries such as; the USA, Canada, Hong Kong, Singapore and Australia ensuring the UK remains an attractive place to conduct ground-breaking research.<\/p>\n

Currently businesses which are registered in the UK can claim R&D tax credits regardless of where in the world the R&D takes place.\u00a0 The UK R&D tax relief pays out around \u00a348billion, yet UK business investment is currrently at \u00a326billion.\u00a0 On announcing this, Rishi Sunak said, “We are subsidising billions of pounds of R&D that isn’t even happening here in the United Kingdom and that’s unfair on British taxpayers.”\u00a0 However there is already a concern that some of the large international research will no longer be done in the UK as a result of this.\u00a0 That will reduce growth in R&D which can’t be a positive, not least in meeting the government’s own targets.<\/p>\n

More details are expected to be released soon on the parameters of this new focus with changes being introduced from April 2023.<\/p>\n

In summary<\/h2>\n

The Autumn Budget and Spending Review put into practice enhancements to the R&D tax credits scheme seeking to accurately reward businesses for their R&D investment.\u00a0 Further details will be announced in due course.<\/p>\n

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