Looking outside the labs – Is UK innovation becoming too expensive?

In a utopian view of the world, innovation would be pursued regardless of cost if it meant securing a better world in which to live.

Balancing funding with the cost of seeking an advance that may never come to fruition is something that many innovative businesses have to contend with.

The accountants who help clients with R&D are well positioned to assist with the ongoing cost of innovation, but only if they understand what can be done about the situation.

Can the UK afford to be innovative?

The amount that is being spent by the Government on R&D has reached record levels, leading to a review of how funds are being managed.

This will mostly be felt by public sector research facilities, but even private innovators are set to face increasing challenges.

Part of this comes in the form of a reworking of the UK Research and Innovation (UKRI) fund that will no longer be as generous and will focus on specific sectors and businesses.

More broadly, the issues facing the public sector are mirrored by most companies, meaning that finding ways to keep up with costs when trying to seek an advance may be more challenging.

Employee expenses and energy bills are continuing to rise, which could make businesses think twice before pursuing an advance that may not be commercially viable.

How can innovation be more affordable?

While the changes to UKRI are disheartening for some businesses who would previously have benefitted from support, there are still avenues for funding that should be explored if innovation is to continue.

The Government is continuing to invest in R&D, albeit in more targeted ways, so accessing grants directly or making use of regional investments could help businesses tackle costs.

R&D tax reliefs are likely to be the main way to offset rising expenses and should be utilised to the fullest extent possible.

Many of the costs that are increasing as a result of the challenging economic situation currently affecting the country can be included in an R&D tax relief claim.

The portion of salaries spent working on a valid R&D project and the energy costs associated with the work can be incorporated into an R&D tax relief claim.

Disruptions to global supply chains have caused the price of many components to increase, but if materials are irreversibly changed, damaged or destroyed during R&D and cannot be resold, then they can also be incorporated into a claim. 

One of the main benefits of using R&D tax relief claims to support innovation is that the funding is not tied to the outcome of the project.

Aborted or failed projects can often be the centre of an R&D tax relief claim, provided it is possible to demonstrate that the competent professionals involved in the work had genuine cause to believe that the work would have been successful.

This is where working alongside an expert R&D tax consultant can be helpful.

Our team are adept at representing the full scope of the R&D project in technical narratives while ensuring that all relevant costs are included.

Enquiries can delay funds being awarded and can cause issues for future projects.

We defend valid R&D tax relief claims, ensuring that the full value is preserved and that the matter is handled as efficiently as possible.

As an accountant, you are likely faced with clients who are increasingly concerned with managing their costs.

By working together, we can help innovators make the most of R&D tax relief claims so that innovation is not seen as too expensive.

Get in touch for support in making the most of R&D tax relief claims to aid innovation.

Adam Bointon

Adam Bointon is a Technical Director specialising in R&D Tax Credits for SMEs in manufacturing and software sectors. With over 15 years’ experience, he works closely with businesses to identify qualifying R&D activities and prepare clear, compliant claims. He combines technical expertise with a strong understanding of economics and finance to support successful outcomes. Adam also contributes to industry webinars and CPD sessions, sharing insights on R&D tax relief and HMRC requirements.