What will the election mean for BFPA members claiming R&D Tax Credits?

29 Nov 2019

With the election now looming BFPA members may be interested to better understand how each of the two major parties claim they are going to treat R&D Tax Credits. To summarise, the salient points are as follows:

Conservatives

The Conservative manifesto pledges especially to increase support of the R&D tax credit. They will raise the rate from 12% to 13% – this is the rate applicable to the Research and Development Expenditure Credit (RDEC) which is for large companies. They have also pledged to review the definition of R&D so it encompasses data/cloud expenditure that is invested in innovation.

No specific mention has been made of the SME R&D scheme, there are however a number of comments that underline the commitment to technology and innovation as a significant priority for the UK. A number of sectors were specifically mentioned as needing more R&D support which included life science, decarbonisation, flood defence, AI and robotics.

The full Conservative manifesto can be found here.

Labour

The Labour manifesto commits to ‘manipulate’ funding for R&D activity to raise the overall R&D spend. They also issued a separate document titled ‘Labour’s review of corporate tax reliefs’ which laid down a plan for a full review of all corporate tax reliefs including R&D tax for SMEs.

The tone of the document makes it clear that they believe the scheme is not working in its current form and will need to change. Especially, under the funding document, they confirm that they would abolish the RDEC scheme and the Patent box scheme.

The full Labour manifesto can be found here.

Many BFPA members take advantage of the current R&D Tax Credits scheme and the majority opinion amongst those members is that the current scheme works well and should not be changed. Members may also recall that BFPA operates a Strategic Alliance Partnership with an R&D Tax Consultant who can help members on a no win – no fee basis. Further details may be found on the BFPA website via the Members Only Log In pages.

Chris Buxton

CEO, BFPA