Autumn Statement 2022 – Impacts on R&D
The UK Government released its Autumn Statement 2022 on 17th November 2022. This comes at a time of significant economic challenge for the UK therefore, the governments priorities are stability, growth and public services, while reducing national debt.
These priority areas have led to the following changes, that will have an impact on businesses performing research and development:
For expenditure on or after 1 April 2023, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%.
Whereas for expenditure on or after 1 April 2023, the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%.
This reform ensures that taxpayer support is as effective as possible, improves the competitiveness of the RDEC scheme, and is a step towards a simplified, single RDEC-like scheme for all.
Public spending on R&D will increase to £20 billion a year by 2024-25, a cash increase of around a third compared to 2021-22. This is the largest increase in R&D spend ever over a Spending Review period.
As part of this increase, Innovate UK programmes were allocated £2.6 billion across the Spending Review period, which will support the UK’s most innovative companies and leverage in private sector investment. The government is also now confirming that funding for the UK’s nine Catapults will increase by 35% compared to the last 5-year funding cycle. This £1.6 billion investment will allow Catapults to continue to support innovation and commercialisation by providing access to world-leading facilities, skills, and equipment across the UK. This includes the Compound Semiconductor Applications Catapult in Wales, the Digital Catapult centre in Northern Ireland and the Offshore Renewable Energy Catapult centre in Scotland.
The government will help more small and medium sized manufacturing firms boost their productivity through advanced digital technology by extending the Made Smarter Adoption programme to the East Midlands. This follows the positive feedback the Made Smarter Adoption programme has already received in the North East, West Midlands, North West, Yorkshire & the Humber.
Vincent Seddon, Commercial Director – “The new statement has caused unsettle throughout the R&D community, however the R&D tax relief scheme will still provide a lucrative relief to those conducting R&D. The funding landscape however will see a positive boost in investment, which will have a great impact on the UK’s ability to continue delivering world class innovation.”
If you’d like to discuss the impact that these reforms could have on your business, your future R&D Tax Credit claims, please get in touch.
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