R&D to receive tax boost

The Chancellor George Osborne announced an 'above the line' tax credit for 2013 to encourage research and development (R&D) activity by larger companies in his Autumn Statement.

The Government will consult on the detail at Budget 2012 and will ensure that SME R&D incentives are not reduced as a result of this change. This builds on measures at Budget 2011 to increase the generosity and accessibility of R&D tax credits for SMEs.

EEF chief economist, Ms Lee Hopley, welcomed the move.

“Making R&D tax credits payable above the line is a smart reform without a big price tag. It will send a powerful signal that government intends to make the UK the number one choice for R&D investment and is another step on the road to making the UK to the most competitive tax system in the G20,” she said.

“This reform will strengthen the link between the credit and the R&D function and make it more valuable to R&D decision makers. It will have a positive impact on investment decisions across a range of companies and support rebalancing growth towards high value investment in innovation and jobs.”

The CBI added: "The commitment to introduce an above-the-line research and development (R&D) tax credit will have a positive impact on the attractiveness of the UK as a place to invest.

“Extension of the successful Regional Growth Fund by a further £1bn will encourage business investment and create new jobs, particularly in manufacturing."