Government opens R&D tax credit consultation to boost technology sector

Government is consulting on plans to change R&D tax credits in a move to encourage more technology companies to invest in innovation

The government has opened a consultation on its plans to change R&D tax credits in a move to encourage more technology companies to invest in innovation.

Plans for an above-the-line (ATL) R&D credit were announced last week in the budget and could simplify the way companies claim R&D by offsetting their tax relief against operating profit.

The proposals follow recent reforms aimed to improve R&D tax credit for small business.

The government’s aim is for an ATL credit that works well for all businesses and provides the best mechanism for supporting UK R&D investment, said David Gauke exchequer secretary at the Treasury. 

“Overall, we would like a system for supporting R&D which is simple for both business and HMRC to administer. Reflecting this, we would also welcome your views on the existing large company scheme and whether it should be retained,” Gauke said.

David Roberts, director at The Corporate IT Forum, said the ATL R&D proposal was a welcome move. 

“We are not going to grow the economy or return to being a world force without innovation and without unique products that are protected from copy-cats who have not paid the price of the supporting R&D,” said Roberts.

Steve Rothwell, CEO of mobile digital voucher company Eagle Eye, said anything the government could do to make innovation easier would boost the technology industry and economy. “Our recommendations would be to do anything that could make it easier for companies to access R&D by cutting down on the paperwork involved,” he said.

But Mariana Mazzucato, chair in science and technology policy at the University of Sussex, told Computer Weekly the government must introduce more structured ways of helping companies with R&D if it is to effectively encourage innovation. She says only 3% of the UK economy comes under high-tech manufacturing.

The consultation will close on June 29.

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