I’m not sure that I was ‘excited’ about a possible increase in R&D tax relief rates this afternoon; however, as someone who spends a lot of time talking about R&D tax credits, I was interested to see what might happen with them following the grand fanfare around R&D more broadly in the Government’s recent Industrial Strategy document.
In particular, I was hopeful that whilst the 130% enhancement afforded to SMEs was unlikely to change, the 30% equivalent for large companies would be enhanced a little.
As with much about this afternoon, whilst there was news, it was the news that nothing much is changing – the Government has concluded that the current R&D regime and mechanics behind it are in no need of change and are competitive in the global marketplace.
What we have been told is that the administrative burden of making a claim will be reduced – I’m not immediately sure what that really means, albeit we do know that there is a move to look at the way in which larger claimants are required to keep records relating to R&D claims. We are also told that the Government will increase awareness of the scheme amongst SMEs – currently this is largely left to accountants and tax advisers to do.
Personally I think that for SMEs the current method of making a claim is not overly complex, and there is a balance between making a claim straightforward but retaining a level of criteria which ensures only those companies undertaking genuine R&D can successfully claim. It’s not perfect, but it does the job.
What we do know about the Industrial Strategy is that more money is going to be spent on training and in particular I note that funding will be increased for more PhD students in the STEM (science, technology, engineering, and maths) subjects, and that a new qualification will be introduced in the form of the T-level, a technical vocational A-level.
No doubt there is much more to come from the Government on the Industrial Strategy document; however, the bonus of further enhancements to the already generous R&D regime has unfortunately not come through.