Mark Tighe, CEO of Catax: specialist advisors in capital allowances, R&D tax credits and the Patent Box, commented: While the Chancellor repeated his commitment to making the UK a world leader in enterprise and innovation, it was disappointing he did not give this more of a focus in his speech, leaving out the detail on plans to support science and productivity to be looked up in the Budget Red Book.
He announced a PAYE restriction on SME R&D tax relief which though designed to prevent abuse of the system sends out a negative message to SMEs that wish to innovate and benefit from the tax relief. This anti-avoidance rule will impact genuine claims made by technology start-ups where their payroll costs are low.
There is already a widespread lack of understanding about what constitutes R&D and who is eligible for this tax relief which was designed to boost innovation across all sectors. We were hoping to see R&D tax relief receive a further boost rather than increased restrictions. At the very least the government must address the confusion over exactly who can and cannot claim for R&D if it is to see the virtuous cycle in which R&D tax credits reinvested in further R&D spread across more sectors. There was good news for innovative companies generally, with £1.6bn funding for certain technologies such as AI, nuclear fusion and quantum computing announced, and increasing the Industrial Strategy Challenge Fund by £1.1bn. There will be further funding to support fellowships for technology based programmes and to support Catapult Centres.
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