CFO Tech UK has published an interesting article highlighting how other countries are strengthening their R&D Tax Credit regimes for the long-term, in contrast to the rushed changes that have plagued the UK system.
It gives some examples:
– France: Strengthened its already generous R&D Tax Credit to make it one of the most competitive in Europe
– Ireland: Now offers a 30% R&D credit (one of the highest in Europe)
– China: Increasing incentives to position itself as a global R&D hub
– US: Moving to restore full R&D expensing after industry pressure
One of the least-discussed but most damaging aspects of the UK R&D regime is the ongoing volatility. Under the previous government, each Budget seemed to introduce new changes, creating uncertainty for companies planning long-term R&D investments.
This reached its nadir with Jeremy Hunt’s 2022 Autumn Statement where a knee-jerk downgrade to the R&D scheme gave SMEs only 4 months’ notice of a circa 44% reduction in the payable R&D credit.
This is one of the key points made in the article by Brian williamson, Chief Strategy Director at Kreoh, who says that the UK risks falling behind international competitors, partly because of the lack of certainty.
He recommends that the UK “signals long-term stability” and “gives multinationals confidence that UK R&D policy won’t shift every Budget but will be part of a 10-year innovation strategy”.
As he puts it: “This isn’t a war of words or tariffs. It’s a silent competition.”
Let’s hope Rachel Reeves builds on the stability signalled in her Autumn 2024 Budget and gives businesses long-term certainty around the UK’s R&D regime.
Thanks to Micah L. for the heads-up.
You can find the article here.
Article written by Rufus Meakin
Rufus Meakin works with tech companies to help ensure their R&D Tax Credit claims are accurate and defendable.
