To ask the Chancellor of the Exchequer, with reference to exhibition 1 on page 12 of the Centre for Business Research’s May 2021 Report on R&D tax credits, what assessment his Department has made of the implications for his policies of the decrease in self-funded levels of R&D spending since 1999.
1 February 2022
Innovation and technological progress are central to driving long-term growth and improving living standards. Evidence shows that countries with higher Research and Development (R&D) activity tend to have higher productivity. The latest evaluations published by HMRC show that while the R&D expenditure credit scheme for large companies generates £2.40-£2.70 of additional R&D expenditure for each £1 of tax relief claimed, the small and medium enterprise scheme generates £0.60-£1.28 for each £1 of tax relief claimed.
The Government continues to consider other areas for reform as part of the ongoing review, in addition to the announcements set out at Autumn Budget 2021. In considering other reforms, the Government’s objectives remain to ensure that the UK remains a competitive location for cutting edge research, that the reliefs continue to be fit for purpose, and that taxpayer money is effectively targeted.