Budget 2020 – Investing in innovation
Government’s landmark investment is the largest and fastest ever expansion in support of researchers and innovative businesses.
In today’s Budget announcement, the Chancellor of the Exchequer Rishi Sunak set out plans to increase public Research & Development (R&D) investment to £22 billion per year by 2024-25, taking direct support for R&D to 0.8 per cent of GDP and placing the UK among the top quarter of OECD nations – ahead of the USA, Japan, France and China.
Steve Govey, Head of R&D Tax Relief at Beavis Morgan, comments:
“The good news in the Budget for R&D is twofold:
“Firstly, the rate at which Research & Development Expenditure Credits (RDEC) is paid will increase from 12 per cent to 13 per cent from 1 April 2020. The RDEC scheme applies to larger companies (over 500 employees) and also to SMEs who receive certain types of grants.
“Secondly, the feared PAYE cap on the SME scheme has been delayed until April 2021 pending on further consultation on the methodology to be used. This had been a big worry for those companies who make claims based on subcontractor costs and therefore pay relatively little PAYE. Beavis Morgan took part in the 2019 consultation and remonstrated in suitably robust terms regarding the negative impact the cap would have on bona fide claims.
“On balance we are encouraged by the Government’s continuing and slightly more generous approach to R&D as it continues to support investment in innovation and productivity.
“Our main criticism at the moment is the length of time taken to process claims.
To safeguard against any delays this year, we are working hard to ensure that claims are submitted as fast as possible for our clients and, as with 2019, we will continue to put pressure on HMRC to ensure that claims are processed timeously.”
The process of claiming R&D Tax Relief can be complex and it requires specific technical expertise to present the application effectively to HMRC. However, with the right adviser it may be easier than you think to claim tax relief.