With the general election one week away, leading specialist R&D tax adviser ForrestBrown shares its wish list for the next government to optimise research and development (R&D) tax relief and propel the UK’s innovation ambitions.
The manifestos of major parties have made commitments on R&D: the Labour Party plans to scrap short funding cycles for key R&D institutions in favour of ten-year budgets, and the Conservative Party promises to increase public spending on R&D to £22 billion a year and maintain R&D tax reliefs.
In light of this, ForrestBrown has shared how the new government can further amplify the UK’s status as an R&D leader by targeting key improvements to tax incentives.
Recent revisions to the UK government’s merged R&D tax relief scheme aimed to streamline initiatives and simplify applications for innovative businesses. However, as the election approaches, ForrestBrown highlights further fine-tuning needed to bolster innovation.
- Setting a new R&D target: Advocating for a clear target for R&D expenditure as a percentage of GDP to drive national innovation efforts.
- Ensuring adequate HMRC funding: Securing the right quantity and quality of resources for HMRC to undertake effective compliance efforts to safeguard the integrity of R&D tax relief.
- Improving data transparency: Calling for enhanced business R&D investment data from the Office for National Statistics to inform policy and strategy effectively.
- Research updates on additionality: Requesting updated HMRC research on additionality and spillover benefits of R&D investments.
- DSIT-led review of R&D definition: Proposing a review of the R&D definition led by DSIT to support HMRC in effectively implementing incentives.
- Transparent expert advisory panel: Ensuring for a sectorally diverse expert advisory panel to provide transparent guidance reflective of R&D’s broad scope.
- Up-to-date guidance: Seeking regularly updated guidance to prevent errors and improve consistency in compliance.
- SME relief evaluation: Recommending regular evaluations of R&D relief for SMEs, exploring the potential for higher rates to support R&D-intensive SMEs.
- Professional standards consultation: Supporting the consultation on raising standards, focusing on the implementation of mandatory membership of professional bodies for tax advisers.
- Consultation on RDAs: Commencing consultation to improve Research and Development Allowances (RDAs) to better incentivise capital expenditure to support innovation.
Commenting on this, ForrestBrown managing director, Sara Brigden, said: “With major political parties doubling down on R&D in their manifestos, the steps we have outlined would enable whoever wins the election to put these commitments into action.
“By increasing transparency, improving standards and setting clear targets, the new government has the opportunity to supercharge business innovation.
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By GlobalData“Support for private sector R&D should be front and centre of the government’s policy agenda. We’re hopeful that, regardless of the new government’s form, this will remain a priority.”
