In her momentous Autumn 2024 Budget, Chancellor Rachel Reeves announced sweeping changes to the UK tax code – from Capital Gains Tax to National Insurance.
Investment was also a key priority for the Government, with the Chancellor kicking off her speech with a promise to “invest, invest, invest” – which, says randd uk, is an excellent omen for the UK’s R&D output.
At the same time, R&D tax credits and reliefs remained untouched, with the Treasury pledging to maintain the current levels of support, providing some much-needed stability to those claiming under the scheme.
This follows an earlier speech by the Chancellor, stating: “We will maintain a world-leading capital allowances offer […]. We will maintain the current rates for the research and development reliefs which provide generous support for innovation.”
These moves, says the firm, make a clear statement in favour of R&D tax relief and demonstrate the Government’s ongoing commitment to rewarding and encouraging innovation in the UK economy.
Adam Bointon, Technical Director at randd uk, said: “Retaining the R&D tax scheme is a hugely positive step from the Government, showing renewed faith in the value of tax credits and reliefs for incentivising innovation.
“Not only is this good news for existing claimants, but it may also be a boon to industries where the Government is targeting growth – particularly as staffing costs are also increasing.
“From the Chancellor’s announcement of funding for a number of high-growth sectors, including aerospace and green energy, we see a broad commitment to growing the UK’s output of R&D projects – so we can expect a rise in claims from these areas.”
Targeted public investment and the subsequent growth in productivity for key sectors such as manufacturing, clean energy, carbon capture and new technologies are likely to drive a higher overall claim rate from these industries, says the firm.
However, claimants will need to tread carefully as the Treasury continues its compliance crackdown.
Adam finished: “We know that a growth in the number of claims is good news for the accountancy sector and a sign of good levels of innovation across the economy – but we also know that this can lead to concerns over compliance.
“Given where we were in 2020/21, with over £1 billion estimated to have been paid out on erroneous or fraudulent claims and a record-high number of claims, it’s likely that the Government will act cautiously if claim numbers go up.
“Businesses and the accountancy firms advising them will need to make sure they’ve got expertise behind each claim if the scheme is going to keep pace with R&D-intensive industries.
“I would urge any firm or claimant to get in touch with one of our specialists to make sure that the most innovative businesses aren’t missing out on the full benefit of the Government’s investment in R&D!”
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