The Chancellor had a tough task today in dealing with the short term needs and long term recovery that COVID-19 necessitated. It is encouraging to hear some real steps forward in the R&D roadmap including a commitment to green energy, levelling up, skills and visa agendas and a review of R&D tax relief.
Review of R&D tax relief – could this turbocharge the innovation agenda?
The 2021 Budget set out a commitment to review the R&D tax reliefschemes to ensure they are globally competitive; it feels like we should expect some long-overdue changes to the schemes. We have been strong advocates of making the schemes more appropriate for modern businesses and widening the scope to cover digital infrastructure. This would offer support to the many businesses that have been forced to accelerate their digital transformation due to COVID-19. Yet more can be done, and we will look forward to being part of the conversation.
BUT, we must not let Patent Box slip through the net and with the moves made in this budget we need to ensure that we tie R&D policy and Patent policy together with an unbreakable bond, particularly when it comes to fiscal policy. The big hike in corporation tax to 25% in 2023 will make it even more important for innovation rich businesses to build IP, keep it in the UK and benefit from Patent Box.
Deploying long-term sustainable funding through existing mechanisms as part of the HMRC, such as R&D and Patent Box schemes, is the way we can ensure sustainable recovery for all businesses. We hope we use it to turbocharge the innovation agenda.
Encouraging innovation UK wide – the levelling up agenda in action
The 2021 Budget seeks to position the UK to make the most of global opportunities after EU exit. News that the government will create eight new Freeports in England is welcome. These areas where businesses will benefit from more generous tax reliefs, simplified customs procedures and wider government support, bringing investment, trade and jobs which will regenerate regions across the country that need it most. Freeports will benefit the whole of the UK so discussions continue between the UK government and the devolved administrations to ensure the delivery of Freeports in Scotland, Wales and Northern Ireland as soon as possible.
The government has seized its first proper opportunity to put some real fiscal meat onto the bones of its levelling up agenda. COVID-19 has changed the commute for good and that gives opportunities for businesses and workers to reconsider where and when they want to be based. It’s fantastic to see spending reflect the need to ensure support for businesses right across the country.
The Levelling Up, UK Community Renewal, Towns and Community Ownership Funds will create well-paid jobs, revitalise places, and develop hubs of innovation in every part of the UK.
With the infrastructure bank being based in Leeds and a base in Teesside and Humberside for the development of green energy, the Budget has shown a very real commitment to levelling up. This is extremely welcome.