R&D shake-up to boost UK investment: Sunak vows to ‘build a new culture of enterprise’
Rishi Sunak vowed later this year to ‘create a new culture of enterprise’ by cutting business taxes – but criticized him for not acting immediately.
The Chancellor said he would work with the industry to “get the right answers” this summer before announcing changes to the autumn budget.
Setting the stage for comprehensive reforms to encourage firms to invest more on training and innovation, he said the focus would be on apprenticeship levies, tax credits for research and development and business investments.
Chancellor Rishi Sunak said he would work with industry over the summer to ‘get the right answers’ before announcing changes to the autumn budget
But he was criticized for failing to announce immediate reforms. And businesses still face an increase in corporation tax from 19 percent to 25 percent in April 2023.
Shewun Haviland, director general of the British Chambers of Commerce, said: ‘While there are some positive announcements that companies will welcome, it does not fundamentally address the enormous cost pressures they are facing.’
The chancellor promised to simplify the system of tax credits and cut rates, unveiling a plan detailing potential tax cuts for investment and innovation that will be announced this autumn.
This includes a shake-up of the apprenticeship levy, where firms with payrolls in excess of £3 million are taxed 0.5 per cent of their wage bill every year above that level.
All businesses can use this pot to fund apprenticeships, but Sunak said he wants to make sure the money is encouraging businesses to invest in the “right kind of training.”
The reforms in research and development tax credits, the Chancellor said, would make them ‘effective and better value for money’.
The relief will be expanded to include data, cloud computing and pure mathematics. And Sunak said he would work with businesses on a replacement for the UK super-deduction, which expires in April 2023.
It was introduced in April 2021 to support businesses through COVID and allow them to reduce their tax bill if they invest in their business.
Sunak said he will cut tax on business investments.
Rachel Moore, R&D partner at accountant PwC, said the reforms would help offset the rising corporation tax rate.
But she added: ‘It may be too late for some businesses to plan their R&D budget.
Expansion of R&D relief to include pure mathematics would be welcome, and should attract more data science and artificial intelligence based R&D.’
Manufacturing industry body Make UK said the apprenticeship levy review is ‘overdue’ and would be widely welcomed.
It wants the firm to cover the ‘real cost’ of training raised to be able to afford to hire apprentices. Apprentice expenses from Levy are capped at £27,000, but some firms say the cost is upwards of £100,000.