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Following the announcement that more targeted investment in R&D would be made by the Government, innovative businesses across the UK have been eagerly awaiting further information.
The information has now been unveiled, with the first wave of major investments announced.
For innovative businesses working in these areas and the accountants helping them, it is worth understanding how the investment might impact R&D tax relief claims.
Where is the Government investing in R&D?
Rather than throwing money at a region and allowing innovation to spawn as a result, the Government are taking a targeted approach, seeking to build specific industries across the country.
The investment is designed to mirror the existing R&D infrastructure while expanding its capacity such that the UK can continue to be a major player in global R&D.
The South West will see investment in order to establish the region as a cornerstone of autonomous technology, seeking to develop the most effective drones in the world.
Meanwhile, the Oxford-Cambridge Growth Corridor will be empowered to focus on autonomous vehicles, alongside high‑performance engineering and space technology that could be key in shaping humanity’s future among the stars.
Greater Lincolnshire will see investment in both defence and agriculture in a way that should help businesses grow through the development of real-world products.
In the East Midlands, environmental goals reign supreme as manufacturers will be given the funds needed to focus on making scalable clean energy and advanced production technologies.
This will be paired with funding designed to uplift smaller firms so that they can compete and work with global manufacturers.
A similar environmental focus will be present in East Yorkshire, Hull and Tees Valley.
Decarbonisation programmes and other clean energy incentives are planned for these regions and this may help the UK achieve its Net-Zero goals.
Wales, an area that is often overlooked for R&D, will also be receiving key funding.
Energy security and materials security will be key focuses, paving the way to a more autonomous UK that is less reliant on global supply chains.
What do these investments mean for R&D tax reliefs?
For innovative businesses, the opportunities presented by these investments are notable.
HMRC will be expecting to see a lot more R&D tax relief claims in the targeted sector, including those from the sometimes maligned agriculture sector.
Making direct reference to the investment plans, if they were important for the R&D work, will be necessary, but professional advice should be sought to understand how any grant or investment funds must be treated in an R&D tax relief claim.
For accountants looking to help innovative businesses, it is worth getting the lay of the land and understanding where innovation is likely to occur.
Where accountants may work with specialist businesses, they may find it beneficial to expand operations into a targeted investment region to maximise their R&D potential.
One thing that should change is that there should be an increase in R&D tax relief claims if the businesses that benefit from these investments understand the value of the scheme.
As R&D tax consultants, we work to help innovative businesses across a range of sectors make the most of R&D tax reliefs.
The Government are keen to put the UK on the map for global R&D and we can support innovative businesses and accountants in mirroring this goal.
Get in touch with our team to make the most of the new round of R&D investment.
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