R&D tax reform could create 7,735 jobs
Reforms to Research and Development (R&D) Relief could create 7,735 new jobs, according to the manufacturing body EEF that is proposing the changes.
The changes being proposed, would involve the Government introducing a cash benefit or redeemable credit at the point that R&D costs arise, rather than allowing them to be offset against corporation tax payments.
If implemented, investment in R&D would increase by £390 million, the EEF claims, which would in turn boost the manufacturing industry, enhance the UK’s global competitiveness and drive economic growth.
The news comes as the CBI reports a sharp fall in sentiment among smaller manufacturers.
Commenting, Terry Scuoler, EEF chief executive, said: “Measures to boost growth have to be the government’s number one priority given the weak state of the UK economy. Encouraging high value investment and innovation by UK-based companies as well as attracting foreign investment is crucial for ensuring UK manufacturing and the wider economy can continue to grow. Government must now seize the opportunity provided by its own consultation to make a big difference to the way the credit operates and send a strong signal about the UK’s commitment to R&D. By doing so it would stimulate private sector and foreign investment and help support long-term economic growth.”
Welcoming the proposals, which are outlined in the report ‘R&D tax relief reform – an economic study’, Tim Bradshaw, the CBI head of enterprise and innovation said:
“This is a welcome contribution to the debate on how to build and retain high value R&D activity and jobs in the UK. The UK’s international standing as a place to invest would be significantly enhanced if currently non-profitable companies could gain more immediate benefit from the R&D tax credit. This is possible by introducing a payable element for all companies.”
He added: “A payable element would allow companies to factor the credit into R&D investment decisions independent of their position in the business cycle and should provide a real boost to the economy.”