Chancellor fails to innovate on R&D

Chancellor fails to innovate on R&D
Richard Wilson Tax changes in the Budget failed to address the problem UK firms have in turning R&D into commercial products, according to tax consultants Coopers & Lybrand. The Chancellor’s new consultation document – Innovating for the Future: investing in R&D – dealing with the funding of R&D by industry and government has been criticised for a lack of information on proposed tax incentives for firms moving R&D into commercial products. “The Chancellor admitted that the UK seems to have a higher proportion of scientific research than most countries but a lower proportion of development into patentable products, but he did not make the connection with the tax regime,” said Derek Jenkins, a specialist in high-technology tax at Coopers & Lybrand. According to Jenkins, the UK is unique in its lack of tax incentives to encourage firms to commercialise their research. “The consultation paper gives no hint that the government is moving in that direction,” said Jenkins. This is despite strong representations on the issue, particularly from the electronics sector. However, welcome is tax relief on reinvestment funds up to ?150k per year, which should benefit the small firms in the high-tech sector. Despite any short-comings, the budget was welcomed by the Federation of the Electronics Industry, which singled out the ?50m venture capital fund being set up for universities wishing to turn R&D into commercial businesses.


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