Following the autumn budget today (27 October), Jay Bhatti, R&D tax specialist at MHA, says the Chancellor’s attempt to stop companies claiming R&D relief on expenditure undertaken overseas is misguided, while the government’s claims to be ahead of other nations in terms of R&D spending don’t stack up:
“The Chancellor’s measures to potentially restrict R&D Tax Relief from being available to companies carrying out R&D work abroad, are in direct contradiction to the government’s ‘Global Britain’ and ‘Science Superpower’ ambitions.
“Although it is understandable the government is keen to ensure that the benefits of tax relief are realised in the UK, modern SMEs are increasingly reliant on foreign specialist manufacturers and coders, while the complex design and analysis work still is undertaken in the UK. The blanket approach announced today will discriminate against companies with a genuine presence in the UK but plugged into international talent networks.
“The government’s claims about how the UK is to be a significant R&D player on the global stage do not reconcile with the roll back of the target of publicly funded R&D from £22Billion to £20Billion for 2024-25. Other modern economies recognise publicly funded R&D as a critical investment vehicle, especially needed for high-risk and high-payoff research.
“So all in all, this budget, whatever its merits in other respects, was not a great showcase for Britain as a science superpower.”