We are in unprecedented times and the manufacturing sector within the nation has really stepped up to the plate to offer life-saving personal protective equipment (PPE) and hand sanitiser for the NHS but also local councils. In the midst of all of this, the manufacturing and engineering sector are pivoting their business activities to invest in innovation and fully focuses on the production of vital PPE products. So, how does this all lie in regards to R&D tax credits?

RandD Tax investigates Research and Development (R&D) related measures in the 2020 Budget. The key highlights are:

  • Continued commitment to R&D investment and the two schemes for Large companies, and SMES.
  • Research and development expenditure credit (RDEC) rates of large company R&D claims have increased from 12% to 13% from the 1st April 2020, in line with the Conservative Manifesto 
  • Consultation on R&D qualifying costs to potentially including the costs of buying data and the cost of cloud computing. This will likely benefit the software and AME sector.
  • Anti-abuse cap on payable SME R&D Tax credits of three times a company PAYE and NIC contributions will not be introduced from 1st April 2020. These will be delayed until 1st April 2012

Overall, it is welcoming news that the budget contained no big surprises. The conservatives have treated R&D tax incentives in accordance with their outlined manifesto. Delaying the ‘Anti-abuse Cap’ is logically considering the circumstances.

Full details on the budget can be found here: https://www.gov.uk/government/publications/budget-2020-documents/budget-2020