Now the votes are in and the new party of power has been confirmed, what could be in prospect for the UK's R&D and Patent Box tax incentives during this next parliament?
Labour's manifesto budgeted £855m for HMRC to tackle tax avoidance. Some of this may be allotted to continue addressing the abuse of the R&D tax incentives scheme by some claimants.
A separate pledge to take a sectoral approach assessing where the UK's strengths lie could see certain sectors of the economy with high levels of questionable R&D claims increasingly being scrutinised and action taken against fraudulent claims. At the same time, other areas of the economy may benefit from additional investment to boost existing innovation in those areas.
One sector likely to be a beneficiary is financial services. Keir Starmer's party gave specific mention to the sector, promising to encourage growth through support of technologies such as Open Banking and Open Finance.
Details of policies geared towards automotive, life sciences and creative sectors respectively were promised to be set out once in government. We, therefore, expect to hear more on this in due course.
A National Wealth Fund resourced with £7.3 billion will be set up with a remit to support clean energy development. Aiming to attract three pounds of private investment for each publicly-invested pound, the expectation is significant financial backing of gigafactories, carbon capture and manufacturing of renewable hydrogen generation.
Pre-election, Labour was clear in its desire to instil more certainty for businesses concerning tax. Whereas Corporation Tax was reduced by the Conservatives, but with the plans to continue to reduce it further stopped, Labour capping the MRCT at the current level of 25% for the duration of the term has been promised.
Now Keir Starmer is officially the next Prime Minister, it will only be a matter of time before greater details on what has been pledged come to the fore. As and when this happens, MMP will be on hand to provide analysis to any implications for innovative business.
For a free initial consultation with a member of our team, please get in touch or to speak to one of our team
James is a Content Writer at MMP Tax.
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