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Research And Development Investment Programme Launches In UK

A UK-wide investment programme has launched to deliver £375m of government funding to research and development (R&D)-intensive firms operating in “breakthrough” technology sectors.

The Future Fund: Breakthrough programme, which opened for investor applications on 20 July 2021, was originally announced by the chancellor of the exchequer during the Budget in March, and will be delivered by British Patient Capital – a commercial subsidiary of the UK government’s economic development bank, British Business Bank.

The fund is designed to target later stage R&D-intensive firms in breakthrough technology sectors, including quantum computing, cleantech, and life sciences, to fuel their continued growth.

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Because of their potential to have a significant economic impact, the growth of these innovative companies is seen as critical by the government to the UK’s future prosperity and economic recovery.

British Patient Capital will aim, over time, to construct a portfolio of growth-stage breakthrough tech companies, and will make equity co-investments alongside private sector investors.

“With many world-class universities and a strong track record in science and research, the UK is fertile ground for creating high-growth companies based on cutting edge technologies,” said Judith Hartley, CEO, British Patient Capital.

“Through the commercialisation of R&D, these transformative companies will help to accelerate the deployment of innovative breakthrough technologies that can transform major industries, develop new medicines, support the transition to a net zero economy and strengthen the UK’s position as a science superpower.

“Future Fund: Breakthrough will enable these R&D intensive companies to raise the patient capital they need to fuel the later stages of their growth, and in doing so, help ensure the UK is a world leader in the industries of the future.”

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Programme eligibility

To be eligible for the scheme, companies must be raising a minimum total investment round size of £30m, with the fund making a maximum contribution of 30% to each round – meaning the minimum amount of private sector funding needed is £21m.

The company must also have raised at least £5m of equity investment from third-party investors in previous funding rounds. It must also be UK-based and have significant operations in the country.

In terms of its activity, the company seeking investment must have been spending an average of at least 10% of its total operational cost base on R&D over the past three years, or at least 15% in one of the past three years.

It must also intend for 20% or more employees to be carrying out research for at least three years from the date of investment, in roles that require a relevant master’s degree or higher. 

However, as an investor-led programme, funding applications can only be made by a qualifying lead investor and not by companies themselves.

“As the potential of technologies like AI, machine learning and quantum computing become fully realised and applied at scale, R&D funding is more important than ever to turn the UK’s new breed of innovators into game-changing market leaders,” said Gerard Grech, chief executive of entrepreneurial network Tech Nation.

“Funds focused specifically on R&D intensive companies aligned to the UK’s strategic sectors, including net zero companies, will help to tackle some of the biggest challenges facing society today. It will open up new job opportunities, drive economic growth, and cement UK tech as world-leading.”

The scheme is separate and different to the now closed Future Fund that provided convertible loans of up to £5m to a wide variety of innovative UK companies, to address the funding challenges caused by Covid-19.

In May 2021, the Confederation of British Industry (CBI) published a report calling for an inclusive and innovative economy, which it said could be achieved in part through increasing R&D investment to match the Organisation for Economic Co-operation and Development’s (OECD) levels.

By 2030, the report said, the UK will have a “distinctive advantage” through its focus on innovation, “including in new technologies, where we will become a natural global hub for R&D”.

The CBI has on several previous occasions called on the government to increase its investment in R&D.

Previous investment in ‘impact startups’

In October 2020, research by Tech Nation and market intelligence firm Dealroom showed that investment in UK technology startups addressing one or more of the United Nations’ Sustainable Development Goals has increased nearly 10-fold in six years.

The data further revealed that these firms – also known as “impact startups” – raised €1.4bn up to that point in 2020, with cleantech and climate tech companies raising most of the capital.

Impact startups now account for over 15% of all European venture capital (VC) investment – double the global average and three times higher than a decade ago, with European firms receiving a total of €6bn in 2019 alone.

Most of this investment in the wider European context has gone to climate technology startups, including those developing electric vehicles, which have attracted €9.8bn of VC investment in the past five years.

Separate research by Tech Nation from early September 2020 also revealed that, within Europe, UK net zero startups were leading the way in investment, receiving £336m in 2019, a 28% increase on the previous year. By contrast, French and German net-zero firms secured £216m and £283m, respectively.

By Kevin Colleran

Source: Tech Live

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Current funding opportunities for businesses from Innovate UK

Innovate UK has published a list of its current funding opportunities for businesses and researchers. Please check individual competition dates as they may have been extended.

Innovation loans: April 2021 open competition

Businesses can apply for loans for innovative projects with strong commercial potential to significantly improve the UK economy.

Innovate UK SMART grants May 2021

UK-registered organisations can apply for a share of up to £25 million for game-changing and commercially viable research and development innovation that can significantly impact the UK economy.

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ISCF smart sustainable plastic packaging: business-led research and development

UK-registered businesses can apply for a share of up to £7 million for research and development projects with the potential to significantly impact the 2025 UK Plastic Pact targets.

Creative Industries Fund: fast start business growth pilot

UK-registered micro and small businesses in the creative sector can apply for a package of support to grow their business. This package includes ongoing support from Innovate UK EDGE and funding of up to £25,000 for innovation projects.

Young Innovators Awards 2021/22 (Competition opens: Monday 14 June 2021)

Young people can apply for an award to make their business idea a reality, which includes a grant for £5,000, a living allowance, and tailored business support.

Biomedical catalyst 2021: early and late-stage awards

UK registered organisations can apply for a share of up to £18 million to develop innovative healthcare products, technologies and processes.

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Addressing limitations in manufacturing nucleic acid therapeutics

Apply for funding to set up a research consortium addressing challenges in the manufacture of nucleic acid therapeutics.

Innovation in time dissemination and application

UK registered organisations can apply for support for business-led innovation in resilient time, frequency and synchronisation.

Hydrogen transport hub: demonstration

UK registered businesses can apply for a share of £2.5 million. This is to demonstrate how green hydrogen can be used to power transport solutions for end users.

Expression of interest: Automotive Transformation Fund round 11

UK registered businesses can apply for a share of up to £1 billion for capital-centric investment projects. The project must help industrialise the electrified automotive supply chain at scale in the UK.

Driving the electric revolution: supply chains for net zero

UK registered businesses can apply for funding to research supply chain development for power electronics, electric machines and drives.

Knowledge transfer partnerships: 2021 to 2022, round two

UK registered academic institutions, research and technology organisations (RTOs) or Catapults can apply for a share of up to £6 million to fund innovation projects with businesses or not-for-profits.

SBRI funded competitions

SBRI supports a range of competitions with public sector organisations and departments. Find out more about SBRI: the Small Business Research Initiative.

Latest SBRI competitions:

SBRI: Fusion industry challenges

Organisations can apply for a share of £2 million, inclusive of VAT, to develop solutions that accelerate fusion power plant design and reduce their fuel requirements.

Source: Cambridge Network

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Potential impacts to your R&D tax claim

The 2021 budget announcement limits the size of some R&D tax cash benefits, but will it impact your claim?

The R&D tax credit scheme rewards companies for facing challenges and uncertainties by developing new processes or methodologies or improving on existing ones (technological advancements). All while using a systematic approach.

In the construction industry, the general activity of most companies will not be driven by technological advancements instead, they are generally driven by a client-led goal e.g. renovating a listed building. The way the construction industry advances, especially within the SME market, is through the challenges it faces. 

On Wednesday 3rd March, Rishi Sunak made possibly one of the most important modern budget announcements, outlining the plan to get our economy back on-track and providing us with insight regarding: the increase in corporation tax, the impact this will have on research & development expenditure credit (RDEC) and SMEs, the super deduction and, finally, the R&D tax review.

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Corporation tax

The rate of corporation tax will increase to 25% from April 2023, a 6% increase from the current rate of 19%. The increase is expected to raise £22bn in revenues per year whilst keeping the UK’s rate of corporation tax as the lowest in the G7.

The smallest companies will not be affected as a small profits rate will be introduced for businesses with less than £50,000 profit. These businesses, which is estimated to account for 70% of actively trading companies, will continue to pay corporation tax at the current rate of 19%. A tapered rate will also be introduced for profits of over £50,000 so that only businesses with profits above £250,000 will be taxed at the full rate of 25%.

Super-deduction

For a two-year period from 1st April 2021 until 31st March 2023 businesses will be able to claim the super-deduction on their investment in qualifying plant and machinery. This will allow companies to deduct 130% of what they invest from their taxable profits in the form of a capital allowance. This equates to a saving of 25p for every £1 invested in plant and machinery.

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The aim is to encourage businesses to invest. Levels of business investment in the UK, already low in comparison with the UK’s peers, have fallen sharply during the pandemic with a reduction of 11.6% between Q3 2019 and Q3 2020. The super-deduction aims to give companies the incentive and the confidence to invest in their business and ultimately promote economic growth.

R&D tax consultation

The government will be running a review of the R&D tax relief scheme which plays a vital part in promoting innovation and stimulating growth in the UK economy. The government has set a target or raising total investment in R&D to 2.4% of GDP by 2027. The consultation, therefore, aims to ensure that the current R&D tax relief schemes in the UK are still fit for purpose.

The consultation will seek the views of stakeholders on the R&D tax relief schemes currently in operation and will focus on:

  • Definitions, eligibility and scope of the reliefs – are they up to date with modern business practices and do they currently exclude activities that should qualify?
  • How well they operate for businesses and HMRC – are there ways they could be improved in terms of structure and administration?
  • Targeting of the reliefs – do they maximise the value of R&D activity for the UK economy.

Source: The Construction Index

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UK government has announced extra £250M for ongoing research

The UK Government has solidified its ambitions to become a science superpower by pledging an additional £250 million (€292m) to support research and development.

The money, which will come through BEIS, will be used to support pioneering research, providing UK scientists and researchers more recourse to public funds. It will also fund UK research previously sponsored by Horizon Europe, the world’s largest research programme.

WHY IT MATTERS

The investment supports the Government’s commitment to foster R&D innovation in the UK. In the most recent budget, the Chancellor Rishi Sunak announced the government’s ambition to raise R&D investment to 2.4% of UK GDP by 2027. 2.4% is the current OECD average.

This cash injection brings the total UK R&D investment for 2021/22 to £14.9 billion (€17.4b). This surpasses the goal set in the November 2020 Spending Review.

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The £250m is in addition to £400m set aside for UKRI and National Academies for 2021/22.

It is still unclear, however, how the UK will pay for its associate membership to Horizon Europe. Some commentators fear it could come out of UKRI’s budget, which would severely impact the UK’s research community and diminish available funds in real terms.

When Britain left the EU, it lost its membership to the research programme. The projected fee to remain in the 7 year programme as part of the UK–EU TCA is £14 billion.

The £250m will be used to support projects that were already part of Horizon.

THE LARGER PICTURE

In its bid to become a science superpower, the UK government recently announced ARIA, which will focus on high-risk, high-reward science and technology and fast-track radical innovation through bureaucratic processes.

The UK also recently released a report on the future of clinical research delivery, which called for clinical research to be embedded in the NHS whilst promoting digital tools to make research more streamlined, accessible and patient-focused.

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ON THE RECORD

UKRI CEO Ottoline Leyser commented: “This additional funding for research and innovation is most welcome and reaffirms the government’s commitment to an R&D-led recovery. UKRI will be working hard with government and the whole research and innovation community to make the most of the significant public investment entrusted to us to build an inclusive and sustainable knowledge economy, now and for the future.”

Dr Joe Marshall, CEO of the National Centre for Universities and Business, was less enthusiastic, however: “The announcement of a £250m uplift in research funding sounds positive on the surface, however it masks a worrying reality. The new cost of more than £1bn each year for association to the EU’s Horizon research programme will now be taken from the research budget. This results in a real term cut in research funding. If the government is serious about being a science superpower, it needs to invest more, not less in research.”

By Sophie Porter

Source: Healthcare IT News

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£250m Additional Funding to Boost Collaboration and Ongoing Research

Scientists and researchers will get an extra £250 million funding this year to support pioneering research and drive the UK’s ambitions to become a science superpower.

As a result, UK scientists will have access to more public funding than ever before. This takes total Government investment in R&D to £14.9 billion in 2021/22 and follows four years of significant growth in R&D funding, including a boost of more than £1.5 billion in 2020/21.

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It will mean UK Government R&D spending is now at its highest level in four decades.

This investment reinforces the Government’s commitment to putting research and development at the heart of plans to build back better from the pandemic. It will support vital and pioneering research while enabling the UK’s brilliant scientists, researchers and businesses to access and benefit from the world’s largest collaborative research programme, Horizon Europe – worth around €95 billion over the next decade.

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Last month the Government announced the new Advanced Research & Invention Agency (ARIA), backed with £800 million by 2024/25 and tasked with funding high-risk, high-payoff research that offers the chance of high rewards, supporting ground-breaking discoveries that could transform people’s lives for the better.

The Government remains committed to reaching its target of 2.4% of GDP being spent on R&D across the UK economy by 2027 and increasing the budget for research and development to £22 billion.

Source: India Education Diary

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R&D Funding – Government Fails To Maximise The Potential Of Catapults

The UK government is unlikely to reach its current research and development (R&D) spending target without increasing the funding available to the country’s technology and innovation centres, found the House of Lords Science and Technology subcommittee.

Known as “catapults”, these not-for-profit, independent technology and innovation centres are designed to connect businesses with the UK’s research and academic communities with the aim of turning innovative ideas into commercial products.

According to a report published 5 February 2021 by the subcommittee, the government’s current approach “lacks a detailed plan for delivering its R&D ambitions”. which – in tandem with a lack of effective funding – means it is “unlikely” the government will attract enough private investment to reach its target of 2.4% of GDP spending on R&D by 2027.

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The report claimed that catapults were well-placed to contribute to the government’s “levelling-up” agenda and its R&D strategy, and that the Department for Business, Energy and Industrial Strategy (BEIS) is currently undertaking a review of how catapults can strengthen R&D capacity and improve productivity. The review is due early 2021.

It also noted while catapults are currently funded via a “thirds model” – whereby the government (through Innovate UK), industry partners and collaborative R&D funds (which are bid for by consortia involving the catapults) each provide a third of the money – caps placed on the amount of collaborative funding they receive, as well as their inability to apply for Research Councils’ funding, limit the amount of investment the actually available to them.

“The funding available for innovation in the UK does not appear to be commensurate with the government’s ambitions, as set out in the R&D Roadmap. Rules governing funding for innovation create barriers to collaboration between for Catapults and universities, and can deter industrial partners,” it said.

“First, the cap on collaborative R&D funding for public sector bodies inhibits collaboration between catapults and universities. Leveraged funding requirements place too much risk on industry in transformative R&D projects. Finally, lack of access to Research Council funding puts catapults at a disadvantage compared to universities.”

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To deal with the issue, the committee recommends that the government, UK Research and Innovation (UKRI), and Innovate UK create a clear plan for how public sector resources and private investment can be made to match the Roadmap’s scale of ambition, and that UKRI allows catapults to bid for Research Council funds where there are clear advantages in terms of both research and innovation.

It further recommended that Innovate UK be more flexible in how much public sector bodies receive from collaborative R&D funds, which are currently capped at 30% and must be shared between all bodies involved.

“The UK’s innovation system has all the necessary components to be successful, but it lacks the necessary scale and collaboration to fully realise economic benefits for the UK,” said committee chair Narendra Patel.

“The Catapult Network is an important national asset which has the potential to drive further innovation. The catapults could have a much larger impact if their performance was not held back.

“To maximise the impact and potential of catapults, collaboration should be strengthened with academics and industry. The government should broaden access to funds and prioritise scaling up the network catapults. Without urgent action to attract more private investment, the government is unlikely to meets its R&D spending targets.”

The committee also claimed that catapults have the potential to contribute to regional development and support the government’s levelling-up agenda. However, better coordination is necessary to unlock this potential.

According to science, research and innovation minister Amanda Solloway, who is quoted in the report: “Catapults are national assets established to have a national remit and capability. They do not have specific objectives to support levelling up.

“However, their national presence covers over 40 locations across the UK, and there are many examples of catapults creating local clusters of innovation activity.”

The Catapult Network, which represents nine tech and innovation centres across 40 locations, further noted that UKRI’s Strength in Places Fund – which aims to drive economic growth in specific areas of the UK – is “geographically ring-fenced”, preventing “catapults from investing in regions where they do not presently work”.

In its recommendations, the subcommittee said that BEIS and UKRI should “develop a more strategic approach across policies for innovation and regional development – such as broadening access to the Strength in Places Fund”.

By Sebastian Klovig Skelton

Source: Computer Weekly

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£80,000 Awarded to Projects from the Welsh Creative Sectors

Clwstwr announces latest cohort of innovators to benefit from research and development (R&D) support.

Creative freelancers and micro-businesses are developing new ways of working thanks to an initiative led by Cardiff University.

Clwstwr, which works to drive innovation in the creative industries in South Wales, has awarded grants to eight projects in its latest funding round. The cohort will work to find improved techniques in areas including remote interviewing, the workflow of set design in high-end television, mimicking the look of shooting in film using digital tools and Welsh language news for young people.

Proposed innovations also have the potential to improve sustainability, tourism and inclusion.

The 2021 Clwstwr seed cohort was chosen following a two-day Ideas Lab, where attendees learned about the principles of research and development (R&D) for innovation. The group will now work closely with industry experts and academics to develop their ideas over a three-month period.

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Sara Pepper, Chief Operating Officer for Clwstwr, said:

“We have been really impressed by the progress of the projects that we funded from our first Ideas Lab in 2020 and are looking forward to seeing what this new cohort will develop and deliver.

“Our commitment to early-stage innovators is a key part of our work. COVID-19 has had a significant impact on freelancers and businesses working in the cultural industries. We hope that by providing development opportunities such as this one, we are helping to maintain a thriving and vibrant creative sector in South Wales which will grow further in the years to come.”

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Yeota Imam-Rashid, of Cardiff production company Little Bird Films, received funding for a project called Green Screen. Yeota said:

“Green Screen will explore how we can achieve as close to a zero-net carbon footprint as possible in media production, by looking at every aspect of the process.

“Little Bird Films is very excited to be part of something that could have far reaching effects for generations to come. It has huge potential to put Wales on the map as a leader in sustainable media production.”

Deputy Minister for Culture, Sport and Tourism, Lord Dafydd Elis-Thomas, said: “Clwstwr is providing a wide range of Welsh creative businesses with the opportunity to explore new products and services through their next funding round. I’m delighted that Creative Wales is providing the match funding to enable these businesses to get this much needed boost through the well regarded Clwstwr programme.”

Clwstwr, led by Cardiff University in partnership with the University of South Wales and Cardiff Metropolitan University, is a five-year research and development programme that aims to nurture a thriving media production hub around the Welsh capital.

Funded through the UK Government’s Industrial Strategy, with match funding from Creative Wales, Clwstwr brings together all major Welsh broadcasters including BBC Cymru Wales, S4C and ITV Wales with independent film and television production companies, Wales’s national companies and creative organisations, creative coworking spaces, tech start-ups, strategic agencies including Arts Council of Wales, local authorities including Cardiff Council and Welsh Government.

Since 2019, Clwstwr has awarded £2 million to 66 projects to develop their ideas for new products, services and experiences for screen and news.

By STEVE MCNALLY

Source: BusinessNewsWales

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Innovate UK – £1.2m To Develop Chemical Recycling Technology In The UK

Cranfield University; Recycling Technologies, a specialist plastic recycling technology provider; and Birmingham and Surrey Universities have received backing from Innovate UK Smart ‘open grant funding programme’ for a £1.2m project to enhance and improve the efficiency of chemical recycling technology in the UK.

The research project aims to further develop and enhance the RT7000, a machine manufactured by Recycling Technologies which converts waste plastics into Plaxx®, a recycled feedstock which can be used to manufacture new plastic.

The parties will work together on developing an online monitoring system which will predict and control Plaxx® quality based on input composition and process conditions.

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This collaboration will result in reduced running costs and improved efficiency for the RT7000 and, in turn, will speed up the development of commercial chemical recycling benefiting the environment by reducing the need to incinerate, bury or export residual plastic waste.

Cranfield, Birmingham and Surrey Universities have been individually working with Recycling Technologies on its cutting-edge technology. This project will bring together their expertise and skills to accelerate a solution which will help solve one of the biggest global problems and ensure a more sustainable future for the planet.

Marvine Besong, Technical Director at Recycling Technologies, said: “Recycling Technologies is delighted to have received this grant from Innovate UK’s far-sighted Smart programme to invest in the best game-changing, commercially-viable and innovative disruptive ideas. Our collaboration with these leading UK universities with a long track record of successful engineering research and development will fast-track our mission to accelerate the evolution of waste plastic into a more sustainable material.”

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Joy Sumner, Senior Lecturer in Energy Materials at Cranfield University, said: “This is a fantastic chance to bring Cranfield’s materials degradation know-how to practical application, helping Recycling Technologies as they design and construct plant for recycling plastics into usable products.”

Gary Leeke, Professor of Chemical Engineering at the University of Birmingham, said: “Birmingham has been working in the chemical recycling of plastics for the past nine years. A team of academics and researchers is excited to support the development of Recycling Technologies’ commercial chemical recycling plant. The team involves academics from Chemical Engineering and Metallurgy and Materials who are working with the wider project team to control the quality of the Plaxx product and improve plant efficiency. Technology development of this kind is key to supporting the transition from a linear to a circular economy for plastic waste.”

Professor Rex Thorpe of the Department of Chemical and Process Engineering at the University of Surrey, said: “I have been pleased to support this company in its goal to create a process that turns plastic waste into a valuable feedstock for the future chemical industry. This grant enables me to spend more time and resources on that support.”

Source: Cranfield University

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Corporation Tax Increase Is A Self-defeating Strategy

As a Corporation Tax rate (currently 19%) rise remains a possibility for this year’s budget on 3 March, Chris Denning, Head of Corporate and International Tax at MHA MacIntyre Hudson, believes the government needs to stimulate enterprise and investment and, like it or not, the Corporation Tax rate is a seen a bell weather for the attractiveness of the UK economy.

Denning said, “Small changes in tax rates are more about influencing behaviour and sending a message than raising revenue. For foreign investors, already nervous about the post-Brexit environment, a rise in the headline rate of Corporation Tax could be the straw breaking the camel’s back for any potential overseas investment.

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This would not necessarily be due to the extra tax in and of itself, but because of the message it sends out about the UK’s willingness to preserve the current fiscal regime which foreign investors find attractive and is one of the key drivers in the UK being a preferred location when businesses are expanding internationally.

“The UK needs a fiscal regime centred around international competitiveness now more than ever. The Chancellor should concentrate on growth and the way to do that is to create a vibrant economy. He needs to use his fiscal tools, like varying tax rates, in a positive rather than a negative way.

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We have good foundations in place already, with our foreign dividend and participation exemptions, R&D tax relief, Patent Box relief and the Capital Allowance regime. It is vital not to backslide on this as post-Brexit the UK is arguably now less attractive to overseas investors. With borrowing also currently very cheap, there is no need to pay for the pandemic in the short term.

“Corporation tax revenues are a relatively small part of the UK’s total tax intake (circa 6% in 2019/20) and total receipts have increased in recent years, despite the main rate being lowered in 2017 (from 20% to 19%).* A rise in the tax rate, even if it raised more revenue, could not raise enough to compensate for the damage to the UK’s reputation for competitiveness.”

Source: London Loves Business

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Industry calls for reform to ‘outdated’ R&D tax credit regime

Tax credits for companies doing research and development must be reformed to kick-start the economy and make the UK a more attractive place for investment after Brexit and Covid, industry leaders have warned.

Eight powerful trade bodies representing firms spanning the pharmaceuticals and tech industries to food and drink and aerospace have come together to urge Chancellor Rishi Sunak to change the rules in a bid to kick-start a wave of innovation.

The current “outdated” rules do not allow companies to claim R&D tax breaks on capital spending, such as on labs and buildings and machinery, unlike in other countries such as France, Spain and Japan.

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A report commissioned by the industry bodies said: “In other words, there are far stronger incentives to physically locate new research facilities in other countries.”

Enhancing the R&D tax credit regime to include capital spending could create a strong incentive for companies to invest in Britain.

The change could add £4bn a year to the economy within a decade, according to the report, and create at least 12,000 jobs – mostly in high-skilled, high-wage manufacturing areas such as new medicines, robotics and clean energy. It would pay for itself in seven years, and produce a net gain for government coffers.

Richard Torbett, chief executive of the Association of British Pharmaceutical Industry (ABPI), said: “This report shows just how critical R&D will be to our recovery, but also how we do not have the incentives other countries do to attract more investment and job creation in the UK. We are calling on the Chancellor to reform tax credits and give a real kick-start to the recovery.”

The policy would also create new investment and jobs created in regions like the North and, the groups said, areas where the Government has committed to boosting employment and the economy. It would also help the government to meet its pledge to increase the country’s R&D spend to 2.4pc of GDP by 2027, from the existing level of 1.7pc.

Business R&D expenditure has increased by more than a third in the last decade, rising from £19bn in 2010 to £26bn in 2019. It now accounts for 8.3pc of all company spending, up from 5.2pc in 2010.

There are some tax benefits attached to R&D capital expenditure, but they treat loss-making and profit-making firms differently.

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Profit-making businesses get back 19pc on R&D capital expenditure through the tax system, but loss-making ones get nothing back. This is important in the context of a pandemic-related economic downturn, the report argues, because many more firms are expected to make a loss.

Steve Hughes, the report’s author, said: “The move to include capital expenditure allowances in R&D tax credits would be very simple to implement, would make the UK a better place to invest in, would drive jobs and growth across the regions that most need levelling up, all for a policy that is self-financing. It should be adopted as an immediate priority.

“Of all the options the Chancellor has at his disposal to reboot the economy, this is the no-brainer. The UK cannot be the best place in the world for scientific research if incentives for investing in it are suboptimal compared to elsewhere.”

The report was put together by the ABPI; manufacturing body Make UK; space industry group UKSpace; TechUK; the Confederation of British Industry; The Food and Drink Federation; The Association of British HealthTech Industries; and ADS, which represents aerospace, defence, security and space companies.

By Julia Bradshaw

Source: MSN

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