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R&D tax reform could ‘create thousands of jobs’
Business groups have welcomed plans to reform the tax relief available for research and development (R&D), after it was reported that the changes could create thousands of extra jobs.
The Society of Motor Manufacturers and Traders (SMMT) and the Engineering Employers Federation (EEF) claim that the proposed changes to R&D tax relief could boost UK economic output by £3.1 billion over the next 30 years and create more than 30,000 jobs.
From 1 April 2012, the rate of relief under the SME scheme is set to increase by 25% to 225% of qualifying R&D expenditure.
In addition, the current minimum expenditure limit of £10,000 will be removed from 1 April 2012 and relief will thereby be extended to lower levels of qualifying R&D expenditure.
The changes are expected to cost in the region of £205 million a year, although research suggests that the financial benefits could be several times this figure.
Commenting, Tim Bradshaw from the Confederation of British Industry (CBI) said: ‘This is a welcome contribution to the debate on how to build and retain high value R&D activity and jobs in the UK.
‘The UK's international standing as a place to invest would be significantly enhanced if currently non-profitable companies could gain more immediate benefit from the R&D tax credit. This is possible by introducing a payable element for all companies.’
He added: ‘A payable element would allow companies to factor the credit into R&D investment decisions independent of their position in the business cycle and should provide a real boost to the economy’.
