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Markel Tax

24 Jan 2018

R&D: Industrial Strategy creates widespread opportunities for innovative businesses

Last November, the government launched its Industrial Strategy, containing plans designed to transform the economy and to prepare for the UK’s exit from the European Union.

A key objective is to raise the level of investment in research and development (R&D) from 1.7% to 2.4% of GDP by 2027 with the Industrial Strategy Challenge Fund providing money to support work in key industries of the future including artificial intelligence and data, clean energy, mobility and medicine. 

As recently as Monday, Sam Gyimah, the Minister for Higher Education, announced an investment of £70m to look at accelerating innovative healthcare and how new virtual reality projects can help patient recovery. Also earlier this month, businesses were invited to apply for a share of £25m of funding to explore the development of new battery technologies for vehicles.

All of this is welcome news as John Moxon, our Director of R&D Tax Services, explains: ‘With forthcoming funding announcements expected shortly on quantum technologies, the application of data to the early diagnosis of disease and initiatives surrounding construction and food production, there are widespread opportunities for a cross section of SMEs to innovate and invest in R&D. Our experienced R&D and funding specialists are ready to assist our accountancy clients with technical help, as they in turn offer tax saving advice to their own clients.’

The Industrial Strategy has also been warmly received by the chief executive of Siemens UK, as well as the Federation of Small Businesses and the British Chambers of Commerce.

However, a recent National Audit Office report identified risks and questioned whether bodies funding R&D initiatives had sufficient data on funding gaps and research outcomes to ensure that national priorities were being met. Whilst funding and research was found to be established and functioning well in human health studies, it was less co-ordinated in the developing spheres of climate and robotics research. 

It also raised concerns about the future of UK research funding post Brexit. The report pointed out that the UK is a net receiver of EU funding for research. Between 2007 and 2013, the UK contributed €5.4bn and received €8.8bn. In August 2016, the government guaranteed future funding for grants won by British businesses and universities while the UK remains a member of the EU, but the longer term implications are unclear and depend on the outcome of the UK’s Brexit negotiations and policy decisions taken thereafter.

The Public Accounts Committee will be examining research and development funding across government on Wednesday 31 January.

The UK research landscape is already set for significant upheaval with the formation of a new body, UK Research and Innovation, which goes live this April and is replacing the existing Research Councils.

Needless to say, with so much change yet so much opportunity, it is important to work with us to keep fully up to speed with rapidly emerging developments.
Tagged R&D tax relief
Next article in series

24 Jan 2018

Tax advice: Bitcoin, scams and PAYE inspections

Each month we review the emerging themes from the calls to our tax advice lines. Below is a short summary of the key points our team has been discussing with accountants in January.

Strategic partners

  • Tolleys
  • Institute of Financial Accountants
  • BTC Software
  • Lovell Consulting