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The Spending Review on 11 June 2025 brought with it sweeping promises of greater investment across a range of sectors, and R&D was no exception.
With a planned investment of over £22 billion per year for R&D, now is the time to support innovative businesses.
However, the Spending Review does not signal a return to a financial free-for-all, so it is important to analyse what the announcement will actually mean.
What money has been set aside for R&D?
As well as the £22 billion a year that has been announced for R&D over the next four years, the Spending Review also saw a commitment to local investments.
Up to £500 million is available for regional authorities to target investment locally.
The investment plans have been widely praised by those in the science and technology sectors.
Universities UK noted that the investment “cemented the importance of R&D funding to national growth” and many other experts observe that the Government continue to see the value in supporting R&D investment.
What impact will the Spending Review have on R&D tax relief?
While it might not have a direct impact on R&D tax relief, it is still worth observing the effect that extra investment could have on R&D more generally.
Details on how this additional investment will manifest have not yet been revealed, but the empowering of local authorities to award R&D funds is an interesting move.
This could result in some R&D intensive businesses working in areas that either have access to more funds or are investing in the work that the particular business conducts.
Also of interest for innovative businesses is the AI Action Plan which has a £2 billion investment attached to it.
Companies that are working with AI may find themselves well-positioned to capitalise on the Government’s renewed interest in AI.
This coincides with the slightly more lax approach the UK Government is taking with AI regulation, with the matter of copyright, for instance, being more malleable than in other places.
The increase in funding to the NHS might also be a signal to businesses working in medical innovation to continue pushing forward with advancements.
If the NHS has more money, there may be more of a market for new pharmaceuticals or medical technology.
Whether the increased investment will result in any changes to R&D tax relief remains to be seen.
Regardless, we will always support efforts to boost innovation in the UK.
As R&D tax consultants, we will continue to work to support accountants as you work with innovative businesses.
Make the most of the R&D investment, speak to our team today!
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