R&D ambitions at heart of Chancellor’s business support measures
The Chancellor’s Budget was packed full of measures to support research and development as part of tweaks to business tax regime.
Rishi Sunak set out an increase in public R&D investment to £22bn per year by 2024-25, with more details to be presented as part of the comprehensive spending review.
It will include more funding for research institutes and universities across the UK, a new blue-skies funding agency, and extra money for specialist institutions including the Institute of Cancer Research.
There was also an extension of the R&D expenditure credit, from 12% to 13%, as part of a number of measures announced by the Chancellor to help the economy to “invest in ideas”.
The government will also consult on whether qualifying R&D tax credit costs should include investments in data and cloud computing.
The Budget included a couple of intellectual property measures, with reforms to the intangible fixed assets regime alongside a further £13m to expand the British Library’s network of business and intellectual property centres across England.
Sunak confirmed two well-trailled measures which had attracted some criticism.
The headline corporation tax rate will remain at 19% in 2020 – a previously-announced change that halted planned cuts in the rate.
He also changed entrepreneurs’ tax relief, but stopped short of abolishing it completely. Instead he reduced the lifetime limit from £10m to £1m in order to fund other business-friendly measures.
There was an increase in the employment allowance by one-third to £4,000, enabling businesses to employ four full-time employees on the National Living Wage without paying any employer National Insurance contributions.
An increase in the annual rate of the structures and buildings allowance, from 2% to 3%, will provide £1bn in additional relief for businesses over the next four years.
As part of its support for the high street, and in addition to its emergency measures to address the impact of coronavirus, the government will support shops,
pubs, cinemas, and music venues in England by increasing and expanding the business rates discount for retail properties.
The government is also introducing a National Insurance holiday for employers of veterans in their first year of civilian employment.
Tax Partner at Garbutt + Elliott, Becky Maguire comments; “The continued focus from the government on increasing R&D spending (to £22bn per year by 2024/25) is hugely relevant for our region – details on where this funding will go will come later in the year at the Spending Review. Fingers crossed that Yorkshire’s stand out sectors (creative, digital + IT, advanced manufacturing, health + life sciences and food + drink) get their fair share.”