R&D shake-up in bid to boost UK investment: Sunak vows to ‘create a new culture of enterprise’
Rishi Sunak vowed to ‘create a new culture of enterprise’ by cutting business taxes later this year – but came under fire for not acting immediately.
The Chancellor said he will work with industry this summer ‘to get the answers right’ before announcing the changes in the autumn Budget.
Setting the stage for sweeping reforms to encourage firms to invest more on training and innovation, he said the focus would be on the apprenticeships levy, tax credits for research and development, and business investment.
Chancellor Rishi Sunak said he will work with industry over the summer ‘to get the answers right’ before announcing the changes in the autumn Budget
But he was criticised for failing to announce immediate reforms. And businesses still face a hike in corporation tax from 19 per cent to 25 per cent in April 2023.
British Chambers of Commerce director general Shevaun Haviland said: ‘While there are some positive announcements that firms will welcome, it did not fundamentally address the huge cost pressures they are facing.’
The Chancellor promised to simplify the system of tax credits and cut rates, unveiling a plan which details potential tax cuts for investment and innovation that will be announced this autumn.
It includes a shake-up of the apprenticeship levy, where firms with payrolls over £3million are taxed 0.5 per cent of their wage bill above that level each year.
All businesses can tap this pot to fund apprenticeships, but Sunak said he wanted to ensure the funds were incentivising businesses to invest in the ‘right kinds of training’.
Reforms to research and development tax credits would, the Chancellor said, make them ‘effective and better value for money’.
The reliefs will be expanded to include data, cloud computing and pure maths. And Sunak said he will work with businesses on a replacement for the UK’s super-deduction, which ends in April 2023.
It was introduced in April 2021 to support businesses through Covid and allows them to reduce their tax bill if they invest in their business.
Sunak said he would cut the tax on business investment.’
Rachel Moore, R&D partner at accountant PwC, said the reforms would help offset rising corporation tax rate.
But she said: ‘This could come too late for some businesses planning their R&D budgets.
The expansion of R&D reliefs to include pure maths will be welcome, and should pull in more data science and artificial intelligence based R&D.’
Manufacturing industry body Make UK said the apprenticeship levy review was ‘overdue and will be widely welcomed’.
It wants the amount firms can spend hiring apprentices raised to cover the ‘real cost’ of training. Apprentice spending from the levy is capped at £27,000 but some firms say the cost tops £100,000.