R&D benefits ‘crucial’ to region’s competitiveness, report suggests
THE UK will lose its attractiveness as a place to do business if research and development benefits are scaled down or withdrawn, says business and financial advisor Grant Thornton.
In a new report, the Dyson effect and the future: Tax incentives for research and development in the UK, Grant Thornton calls for R&D tax relief schemes to be continued, and also recommends that reliefs are not restricted by sector or type of technology.
It also highlights that companies of all sizes should be incentivised to invest in research and innovation, and suggests more should be done to help early stage SMEs and start-ups.
Krista Fox, a tax director at Grant Thornton in Sheffield, says it is encouraging that the majority of business leaders in South Yorkshire are recognising the importance of R&D.
Research by Grant Thornton’s Sheffield office found that business leaders in the region plan to raise investment in innovation for 2011.
The survey found that more than 40% of South Yorkshire companies plan to increase investment over the next year, while only 6% say they may make cuts to their budget.
This is in sharp contrast to last year when investment in R&D dropped significantly in South Yorkshire, where 80% of businesses froze or reduced their R&D budget.
Ms Fox said: “Neither South Yorkshire nor the UK as a whole can afford to lose the benefits of what it has already invested in R&D.
“The current R&D tax credit system has been in place for ten years and we are seeing clear benefits as the knowledge and take-up of the relief continues to expand.
“Our country’s future income growth is expected to come from the expansion of the ‘knowledge economy’ and hi-tech businesses linked to intellectual property.
“The level of investment in research and development will be key to our success in this area and it is important that we incentivise companies to invest in their futures.”
Grant Thornton’s report highlights the importance of a generous R&D tax break to enable the UK to attract global business.
Neil Sengupta, partner in business tax services at Grant Thornton’s Leeds office, said: “Over half of the G20 countries offer some form of tax relief and the Dyson report places the UK 19th in terms of attractiveness of tax credits for R&D.
“If the UK is to remain a competitive place to do business, to attract companies from the global market and encourage companies to spend on R&D activities, it is very important that we maintain, or improve upon, the specific R&D tax reliefs offered by the UK.”
