Budget will promote R&D investment for first time

Budget will promote R&D investment for first time
Richard Wilson
Small and medium-sized high-tech companies in the UK are being encouraged by the government for the first time to increase their spending on product R&D. An R&D tax credit announced by the Chancellor in yesterday’s Budget will reduce the after tax cost of research investment by 12.5 per cent for companies.
The benefit is even greater if the companies are loss-making, where a 24 per cent cut in the tax bill will result. This is being welcomed as recognition by the the government, for the first time, of the importance of promoting a start- up culture through changes to the tax regime.
In the same vein, the Chancellor also announced plans for a new regional venture capital fund of around ?20m to encourage start-up companies.
Most significant of all are plans to introduce tax incentives next year which will encourage greater corporate venturing, where large firms invest in smaller innovative start-ups.

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