Jumpstart Reaction to the Budget – R&D Focus

Jumpstart, the UK’s leading R&D tax relief specialist, welcomes the focus on innovation in the 2017 budget. Scott Henderson, Jumpstart’s Managing Director commented:

“The plan to bring UK R&D spending into line with the world’s other rich nations within a decade is just the fillip that businesses need against the backdrop of Brexit uncertainty. The commitment to improve productivity signals that Britain is serious about maintaining its primary role as a trading nation.”

In the budget the Chancellor announced:

an increase in Government spending on R&D of a further £2.3 billion in 2021-22, taking total spend on R&D in that year to £12.5 billion. The industrial strategy white paper will provide further detail on this.
that the R&D Expenditure Credit (RDEC) rate is being increased from 11% to 12% on 1 January 2018. This is the the rate which applies to large company R&D tax relief.

Mr Henderson continued:

“Whilst welcoming the increase in the RDEC rate, it’s disappointing not to see a similar increase in the relief available to SMEs. 83% of claims in 2015/16 were from SMEs – with a cost to the treasury of £1.3bn. Large company and RDEC claims cost the Treasury £1.5bn – yet only large companies are benefitting from a rate increase.”

“There is a danger which must also be addressed: that too much support in the levels of Government spending on R&D could have the counterproductive effect of increasing dependency on the public purse. The ideal situation is to create a business and innovation environment which convinces companies of the commercial virtues of making their own investments in R&D. This budget goes a long way to achieving that goal.”