News & Views
Budget offers Tax Incentive for Innovative Businesses
Mar 24 2023
Aimed at achieving long-term, sustainable economic growth the Spring Budget announced by Jeremy Hunt on March 15 included a boost for innovative UK businesses through an enhanced R&D tax relief rate – a break for the medical innovation and life sciences industry that the UK BioIndustry Association has long been campaigning for.
The new R&D-intensive company category provides incentive for innovative businesses taking significant financial risk through heavy investment in R&D, through cash payments for every £1 invested. This will be generated by targeting UK taxpayer support to enable life science entrepreneurs to crowd in further private investment, allowing them to grow and accelerate innovation in the UK.
Steve Bates OBE, CEO of BIA, said: “This is a huge boost for biotech companies across the UK developing new medicines and improving healthcare for patients. Our research-intensive industry is a key growth area for Britain’s economy. The Chancellor is rightly focusing UK taxpayer support to enable life science entrepreneurs to crowd in more private investment, help keep the UK at the cutting-edge of international science, and create new high-value jobs across the UK.”
The scheme for SME’s investing over 40% of their total operating costs in R&D and not yet making a profit will receive a cash payment of 27p for each £1 they have invested. All other loss-making SMEs will receive a new lower relief rate of approximately 18p, which was announced at the Chancellor’s Autumn Statement in November 2022.
In line with the government’s vision for the UK to be the best place in Europe for companies to locate, invest and grow, a new policy of ‘full expensing’ will be introduced for the next three years to boost business investment in an effective cut to corporation tax of £9 billion per year. This makes the UK the joint most competitive capital allowances regime in the OECD and the only major European economy to have such a policy. The independent Office for Budget Responsibility (OBR) forecast that this will increase business investment by 3% for every year it is in place. Mr Hunt signalled an intention to make this scheme – which covers equipment for factories, computers and other machinery - permanent when responsible to do so.
A more detailed breakdown of the R&D-Intensive scheme can be found on the BIA website.
More information online
Lab Asia 30.3 - June 2023
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