• Alexander Clifford

What Does Brexit Mean For R&D Tax Credits?

Brexit and R&D Tax Credits? In a Britain that's determined to dominate the economic ladder, how do our leaders plan to push innovation?

Brexit is official and it was starting to seem unlikely that we would even be able to leave the EU once and for all. Regardless of your stance on the matter, we have everything you need to know in terms of R&D Tax and what are the future plans for years to come.

It has to be said that the funding for UK Research has taken a dip in the past few years. In 2014 £5.6 billion was invested but it has dropped to £5 billion in 2017. It has to be said that it's not just the financial connections are going to be interrupted but the level continental collaboration currently in operation across the UK in Research centres and universities.

Industry and innovation in the UK is renowned across Europe and the entire world for producing world-leading work is institutions in every sector. Breakthroughs become possible when bringing together some of the best brains in Europe and sometimes further. 50% of all uk research publications have involvement from a co-author from abroad.

A thing to keep in mind is that the governments post-Brexit ideas have recognised the importance of passing innovation through R&D grants has implied that it will have ‘deep pockets’ when talking through funds.

Studies made by the government themselves have provided the information that £1 of R&D tax relief has directly led to between £1.53 and £2.35 in disbursements this in turn has a tremendous effect on the economy going forward. The government, rightly so, are very confident and dedicated to keeping this momentum well into the future.

What Will Brexit Do For R&D Tax Credits?

First thing’s first and know that we have left the EU officially, that does mean that the state aid cap has been removed and with that this means that the door to higher value handouts has opened and a less strict qualification criteria is in place. These effects are heavily welcomed by SMEs up and down the country. There are already extended and detailed plans to increase funding across the country and also the government plans to raise R&D investment to 2.4% of GDP as early as 2027.

We know one thing for certain and it's that Boris' number 1 goal is for Britain to build the strongest economy we've ever had. Of course, that in turn will continue to support R&D Tax Credits, and the expansion of the eligibility criteria.

The Research & Development Tax Incentive was initially put into place to encourage the continued innovation across all sectors in the UK. But as the world changes, so does the economy, and many businesses have been innovating in areas that weren't initially recognised by the incentive. As Boris said, "Britain is Open For Business", and HMRC are working toward a more inclusive and rewarding R&D Tax Credits System.

To find out more, contact one of our R&D Tax Specialists via Linkedin, or Contact Us here.

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