The 2020 Budget focuses on on the subject of innovation. The Chancellor has made it clear that the UK’s success in the global economy will be rooted in innovation and cutting-edge technology.
11 March 2020
Although the Budget initially focussed on £30bn of measures to address the impact of coronavirus, the Chancellor spent a great deal of time (and money) on the subject of innovation. In a Budget which made it clear that the UK’s success in the global economy will be rooted in innovation and cutting-edge technology, the Chancellor announced (or confirmed) plans to significantly increase public R&D investment to £22 billion per year by 2024-25. He acknowledged that achieving the government’s ambitions on R&D will require investment from the private sector, and announced the following:
- The Research & Development Expenditure Credit (RDEC) rate will increase from 12% to 13% from 1 April 2020. It’s estimated that this measure alone will cost the Treasury in excess of £1bn over the next 5 years.
- A consultation on whether expenditure on data and cloud computing should qualify for R&D tax credits.
- Following consultation last year, the introduction of the PAYE cap on the payable tax credit in the SME R&D schemes will be delayed until 1 April 2021. The government will consult on changes to the cap’s design, to ensure it targets abusive behaviour as intended while ensuring that eligible businesses are able to access the relief.
In a Budget which the OBR have described as the 'largest sustained fiscal boost for 30 years' the Chancellor also confirmed that Corporation Tax will be maintained at the current 19% rate.