5th June 2018
In November 2017 the UK Government unveiled its new industrial strategy [1] with the triple aims of boosting the economy, building on the country’s strengths, and embracing the opportunities of technological change. As part of that strategy the Prime Minister, Theresa May, set ambitious targets for boosting Research and Development (R&D) investment from its present level of 1.7% of GDP to 2.4% by 2027, with a longer term target of 3%.
In tandem with the announcement came four grand challenges; representing an open invitation to business, academia and civil society to innovate and develop new technologies in the areas of artificial intelligence, clean growth, the ageing society, and the future of mobility. The government also started to roll out sector deals, delivering strategic and long-term partnerships backed by private sector co-investment.
Commenting on the new initiatives the business secretary, Greg Clark, said:
“The way we earn and live our lives as workers, citizens and consumers is being transformed by new technologies. The UK is well-placed to benefit from this new industrial revolution and we start from a position of significant strength.”
So what sort of investment levels are we talking about? According to the ONS, in 2016 £33.1 billion was invested in R&D. And whilst pharmaceutical companies lead the way in terms of investment, no business sector is immune to the potential benefits of R&D; particularly when tax reliefs of up to 230% are available for SME R&D investment.
However, evidence suggests that some sectors are better at claiming R&D relief than others. For some, this may be due to the perceived complexity of calculating and claiming R&D tax credits, whilst for others it may be that those who undertake more sporadic development work simply don’t factor the availability of R&D relief into their calculations. Whatever the reason, the government were so concerned that in 2015 they issued a ‘simple guide’ [2] for SMEs covering areas such as the type of projects which qualify and what happens in the event of subcontracting.
Whether directly as a result of the guide or not, the 2015/16 tax year saw an increase in claims, driven by a 22% rise in requests from SMEs. Thompson Jenner are able to help companies in Devon and across the South West to calculate and submit R&D tax credit claims, as well as providing advice on optimal development pathways to maximise the potential for claims.
As Thompson Jenner Partner Jon Westley commented “with developments such as the Exeter Innovation Centre and Science Park, there is considerable scope for the region to benefit from R&D reliefs. The availability of R&D tax credits on software or technology development schemes not only increases scheme affordability, it also brings ongoing benefits; enabling the region to attract and retain skilled people working on behalf of and within cutting-edge organisations.”
[2] http://www.hmrc.gov.uk/gds/cird/attachments/rdsimpleguide.pdf
If you would like to find out more or meet to discuss the business tax services which we are able to provide, please contact Jon Westley or one of our Partners on 01392 258553 or 01395 279521 to arrange a free initial meeting.
