EDITOR’S CHOICE
R&D TAX CREDIT SCHEME
MPA GROUP
BOOM OR BUST? BREXIT’S IMPACT ON INNOVATION
AND R&D
Brexit will undoubtedly affect life in the UK
in several ways. The nature and extent of its
impact, however, is anyone’s guess. Regarding
research and innovation, on the surface not
much should change. The R&D Tax Credit
Scheme is a government initiative and
while it is subject to European Union rules,
ultimately the money is provided by HMRC, so
the amount of funding available for creative
pursuits should not be affected.
Funding freedom
According to the latest figures from the Office
for National Statistics, UK spending on R&D
rose by £1.6 billion in 2017 to £34.8 billion,
placing it 11th in the EU for R&D expenditure
as a percentage of GDP.
But Brexit will likely alter the entire business
landscape for UK companies and these wider
changes may indirectly affect the state of play
for those looking to innovate. While such figures are impressive, with an
average of £527 spent for each person in the
UK, the spending is somewhat restricted by
EU regulations. R&D tax credits are classed
as ‘state aid’ by the EU and as such there are
currently limits on how much the government
can hand out to companies.
Here innovation funding specialists MPA
Group, look at the implications of Brexit on
innovation and R&D in the UK, and whether
the current political uncertainty will actually
give way to a more prosperous environment
for businesses. Once the UK leaves the union, this cap is
removed, opening the door to higher value
handouts and less strict qualification criteria.
Such a move would be welcomed by SMEs
across the country and would signal to the
world that the UK is strongly encouraging
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PECM Issue 41
innovation. Plans to increase funding are
already in place, with the government’s long
term industrial strategy aiming to raise R&D
investment to 2.4% of GDP by 2027.
There’s widespread anxiety about the
impact of Brexit on British industry and the
government faces significant pressure to
provide a boost for the economy. Investment
in innovation would be a clear statement
that the country is still thriving despite the
political overhaul.
With the government potentially looking to
reallocate some of the money they currently
send across to Brussels, there could be funds
available for such action.
Regardless of the nature of the UK’s trading
relationship with the EU post-Brexit,
innovation is always going to be vital
for businesses to stand out and thrive in