Government must do more to support innovation or risk losing our best businesses to competitors

Innovation tax specialist GovGrant comments on the annual HMRC tax credits statistics and says Government needs to demonstrate that it really is pro-business

Commenting before the publication tomorrow (10 October) of the latest HMRC statistics measuring the amount of tax credits claimed by the UK’s most innovative businesses during the previous 12 months, Luke Hamm, CEO of GovGrant, said: 

“The UK’s overall spend on research and development has barely moved at 1.7% of GDP. This is miles behind our competitors and is still well short government’s own 2.7% target. We are currently 11th in the EU for R&D spend, with Sweden, Austria, Denmark and Germany already investing above 3.0% of GDP on R&D.”

"The Government needs to take urgent steps to start to close this gap. We need an increase in the enhancement rate from 130-150% to really help businesses benefit from R&D, more help for small companies, especially tax breaks for entrepreneurs pay to help them scale up and widen the scope of tax credits to other industries like social sciences.”

“It is high time for the Govt to be bold in this area. It spends 0.6% of the total tax take on R&D tax credits and delivers £8.1bn of R&D spend as a result. That is a massive return on investment and crucial if the UK wants to be a destination of choice for innovative businesses post Brexit.”

“Taking positive action on tax credits would send the clearest possible signal that the prime minister and chancellor really are standing up for UK business.”

“The largest proportion of R&D claims still come from businesses registered in London and the South East (40% in 2017). The next is the North West with 12% of the total. The government needs to work harder to encourage technology and innovation outside the South East, for example through extra resources (currently £500m) earmarked for the Northern Powerhouse project (Source HMT NPH Strategy). The North is well below London for patents (48 patents per million of population compared to 120 in London) (Source: HMT NPH Strategy).”

Editors: the HMRC report: Research and Development Tax Credits Statistics, will be published on 10 October.  Visit HMRC website for details.

About GovGrant: GovGrant helps innovative businesses commercialise their innovations, including R&D tax credits. It has completed 6,000 claims and obtained £184m for its clients.  For more information visit: https://www.govgrant.co.uk