Nothing about our world, business or otherwise, is functioning normally right now. For some of us thinking forward, beyond this frightening situation, is a useful coping mechanism. If this supports your way of dealing with the situation, read on. Otherwise, perhaps bookmark this one as ‘useful information for later’.
We’re going to focus on positive things in our blog posts, for the time being. Either celebrating amazing innovations or letting you know about good news you can look forward to implementing, when we’re return to our new normal.
So what’s all this about the Budget then?
This article falls into the latter category, describing the boost to R&D funding that was announced in Chancellor Rishi Sunak’s Budget of 11th March. This may seem like a very long time ago, but we will eventually return to business as usual and, for now, you can use this information as food for thought. How will it benefit your future business?
Not only is the RDEC scheme claimable percentage going up, but the government seems to be putting its money where its mouth is, in terms of long term R&D investment.
What is the change to the RDEC scheme?
The Budget has committed to raising the claimable percentage of the RDEC scheme to 13% of the company’s qualifying R&D expenditure. This is an increase of 1% and it applies from April 2020. This translates to an additional tax saving of £2,400 on the average R&D tax relief claim made through the RDEC system.
Reported figures suggest that 7,000 companies will benefit from this increase. The RDEC scheme is designed for large companies. But some SMEs can also use this process, instead of the R&D Tax Credit system specifically set up for them, depending on their individual circumstances.
Another bonus for individual businesses is that the government have committed to investigating if cloud computing and data R&D should be classified as ‘qualifying expenditure’. Many businesses believe it should be, as a good proportion of their investment is in these areas of research and development. The fact that the government are listening and open to discussion is a good sign.
Other government investment in R&D
The headline figure from Mr Sunak, is the government aim to double spending on R&D by 2024. There will be a 15% increase next year and additional spending in subsequent years. The government’s current target is to spend 1.7% of our GDP on R&D by 2027. If these new announcements are realised, this could be exceeded up to 2.4%.
The Campaign for Science and Engineering’s Dr Sarah Main said: “This is a ‘wow’ moment for us. The government has supercharged public investment in science, delivering investment faster and further than it had promised.”
Patrick Vallance, the chief scientific adviser, told the BBC: “This significant increase in funding for research and development represents an overwhelming endorsement of our world-leading science base. It puts the UK in an excellent position to lead the field in science and successfully meet the challenges of the future.”
A large proportion of the new government investment is for a brand new research organisation, modelled on the American’s Advanced Research Projects Agency. This project will receive £800m of funding and is designed for the highest risk projects. Innovations with equally high potential and risk of failure will be able to apply for funding.
Part of the Chancellor’s commitment is that this new money will not only be funnelled to Oxford, Cambridge and London universities. £400m will be available for universities and institutes to support buying necessary equipment, infrastructure and world leading research.
There will be £900m allocated to our national space strategy and developing innovation within this very specific field.
And £300m has been earmarked to boost PhD and fellowship places that have experimental maths at the heart of their research.
During his speech, the Chancellor said: “We are the country of Newton, Hodgkin and Turing. Ours is a history filled with ideas, invention and discovery and it is truly a national history: the first steam railway ran between Stockton and Darlington, the first television was invented by a Scot. A Welshman invented the hydrogen fuel cell, and Jocelyn Bell Burnell, born in Northern Ireland, discovered the first radio pulsars. To compete and succeed over the next decade and beyond, we need to recapture that spirit.”
It’s great that this rallying cry is supported by some actual investment. It’ll be up to us to make the most of it.