UK will become ‘innovation wasteland’ if Hunt pushes through R&D tax relief cuts, FSB warns

The UK will turn out to be an “innovation wasteland” if the federal government pushes forward with plans to slash analysis and growth (R&D) tax reduction, the Federation of Small Companies (FSB) has warned.

The UK’s largest enterprise group urged ministers right now to reverse plans to intestine the R&D tax reduction scheme, introduced by Chancellor Jeremy Hunt in November, claiming that the plans would spark a mass withdrawal of the UK’s small companies from innovation initiatives.

Begin-ups and smaller companies reaped the advantages of the UK’s R&D system which supplied rebates on innovation spending. Nonetheless, Hunt introduced plans to cut back the rebate to cut back fraud whereas providing extra credit to greater firms.

Analysis from the FSB right now discovered that 64 per cent of of the companies to have earned the tax credit within the final three years would now rein of their innovation funding in mild of the adjustments, equal to 50,000 small companies.

1 / 4 of companies surveyed by the FSB mentioned they might refocus their efforts on “lower-risk” initiatives in mild of the transfer whereas 12 per cent have frozen recruitment and bgun shedding employees on account of the adjustments.

FSB chief Martin McTague mentioned the findings underscored the significance of the tax regime and warned the Treasury it was approaching “deadline day” to determine on whether or not to reverse the lower.

“The UK dangers being left in an innovation wasteland if Jeremy Hunt doesn’t take management of Treasury innovation coverage and restore the one most profitable industrial coverage of the final decade,” he mentioned in a press release.

“Our findings are a reminder to the Chancellor that the Authorities nonetheless has time to do the precise factor – delay or scrap the plan to chop R&D tax credit for small companies from April.”

The warnings come as Hunt gears as much as ship his first full price range in March, extensively anticipated to be a placeholder price range with few main tax cuts.

McTague mentioned there was nonetheless time for the Chancellor to ship “a fantastic price range for development” however urged him to be “much less credulous when offered with bureaucratic certainty that solely massive companies can ship R&D.”

Warnings from the FSB come after experiences that some start-ups had begun to shun the UK and broaden abroad in mild of the tax adjustments.

Twelve prime UK startups together with autonomous driving agency Wayve and synthetic meat-maker Hoxton Farms lobbied Rishi Sunak within the wake of Hunt’s November announcement, warning that the adjustments amounted to a £1bn funding lower for smaller innovation firms.

The Treasury has been approached for remark.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top