CIB: UK set to miss 2027 R&D investment target
03 Sep 2019
The UK government must "turbo charge" the current programme of research and development (R&D) tax credits if it is to help the country meet its R&D investment target by 2027.
The 'Untapped Investment' report*, published by the Confederation of Business Industry (CBI), warns that the UK is set to miss its R&D target by £19 billion, if it doesn't urgently pick up the pace of investment.
“Business investment in R&D is helping to tackle the biggest issues of our generation, from climate change to the future of transport," the CBI says. "Ensuring the R&D tax credit keeps pace with the changing nature of R&D and our international competitors will help spur private sector investment to close this gap".
R&D tax credits have already proven to be effective in spurring private investment. In 2016/2017 R&D tax incentives cost the government £3.4 billion supporting a return of £24.9 billion of expenditure, more than seven times the cost to the government.
However, the CBI adds that, with the UK preparing to leave the EU, coupled with stagnating global growth and declining business investment, there has never been a more pressing time to support innovation, to get the UK economy “firing on all cylinders."
If the UK is to reach its 2.4 per cent target, the CBI is calling on the Government to:
- Widen the scope of eligibility for the R&D tax credit to include:
Data driven innovation
Outsourcing of R&D activities, where this is not already captured
Upskilling and retraining of staff
- Review the availability of data on private sector R&D investment to help monitor and evaluate the effectiveness of government R&D policy
- Regularly benchmark the R&D tax regime against international peers to ensure the UK remains competitive.
Annie Gascoyne, CBI Director of Economic Policy, says: “Pound for pound, the R&D tax credit drives more investment by business than it costs the Government. The tax credit could be the motor to propel the economy forward - but only if it keeps pace with the changing nature of R&D, so it must widen in scope, if the UK is to remain a world-leader in innovation.”
Steve Govey, Head of Research & Development at Beavis Morgan comments: ”A major hurdle is getting business owners to understand the breadth and variety of activities that can qualify for R&D tax credits. The reinvestment of these funds into further development will go a long way to meeting government targets.“
R&D tax relief provides excellent incentives for UK companies to invest in innovation but, as Steve explains, the claims process itself can be complicated and convoluted, with lengthy paperwork and plenty of room for error. It is therefore essential that businesses seek specialist advice to ensure the risks are minimised and all aspects of the process are taken care of, thereby maximising the chance of getting all the money back which is owed.
Is your company involved in manufacturing, design or development of new processes/software or using significantly advancing existing processes or technology in a unique manner?
If so, get in touch. Our specialist team of tax and engineering professionals has made many successful claims on behalf of our clients across a variety of sectors including software development, online gaming, manufacturing, engineering, architecture, pharmaceutical, advertising and telecommunications.
The reliefs can be extremely beneficial for those engaged in qualifying R&D, and Beavis Morgan can help your company maximise the benefits of the reliefs by:
- Determining whether you are a qualifying company
- Helping you to assess which of your activities qualify
- Reviewing your activities to make sure you claim all that you are entitled to
- Working closely with you to prepare and submit your claim to HM Revenue & Customs
For further information visit: beavismorganrandd.com.
*Read the full CBI ‘Untapped Investment’ report