RESEARCH AND DEVELOPMENT tax credits should be reformed to increase business investment, according to a new report.
Introducing the credit at the point of the R&D spend is a better way of rewarding investment, compared to linking the credit with a company’s corporation tax bill.
The report, commissioned by manufacturing organisation EEF and the Society of Motor Manufacturers and Traders (SMMT) and undertaken by PwC, estimated R&D investment could increase by £390m annually and increase output by £665m a year if the credit was reformed.
The £205m cost to the Exchequer would be eclipsed by the benefits to the UK, it said.
“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,” said Terry Scuoler, EEF chief executive.
The report involved discussions with more than 30 UK R&D investors.
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