R&D News

R&D Tax Credits

Research and Development (R&D) tax credits aren’t a new phenomenon but they are fairly recent to the UK. It is well understood that countries that can attract, and develop, companies with intellectual property.

If these companies can use intellectual property to develop new products, it will enhance the country’s tax base. Think of Microsoft, Apple or GSK and you may think of successful companies that are driven to success by commercialization of their R&D. They become important drivers in the economies of their resident countries.

Although the positive effect of R&D was suspected, it wasn’t until the 1990’s that economists examined the effects of R&D and compared the growth of the economy of countries. They found a direct, and predictable, correlation between R&D and the growth of gross domestic product (GDP). These results have influenced a number of countries to look at different ways to encourage R&D.

Research and Development can be paid from a number of sources such as grants, private investment, and more recently tax credits. Financing R&D by the use of government grants is open to criticism since lobbying can influence the direction of the funding. Private investment of R&D brings an expectation of direct future profit and therefore is prone to be used only on projects with high certainty of success in the short or medium term. Private investment is also volatile due to the psychological and material influences of economies. When the economy is looking good and profits are high R&D expenditures increase. In downturns, the converse is true.

R&D tax credits allow governments and companies to be jointly involved with R&D. Companies decide on the R&D they wish to pursue and governments assist with the funding, on a non-influential basis, by making contributions in a highly prescribed manner.

Posted on Monday, 9th August, 2010

Well, the word (actually two words), is now truly on the street… ‘Ingenious Britain’

As the election draws ever nearer it is now clear that whichever party rules the roost at Downing Street after May, one thing is for certain, companies should be confident that the R&D Tax Credit programme will be a part of the business landscape for the foreseeable future. The Conservative Party have taken on-board the recommendations in the report by James Dyson titled ‘Ingenious Britain’ and will retain the R&D Tax Credit programme – effectively a U-turn in policy from last year.

Dr Tim Bradshaw, head of enterprise and innovation at the CBI, welcomed this change and supported Dyson’s view that strengthening the programme further was necessary. He continued by saying: “R&D tax credits should not be restricted to SMEs and hi-tech firms, but should be available to companies of all sizes and sectors. This would encourage all businesses to grow through investment and innovation”.

We think this deserves three sucks on a Dyson vacuum cleaner!

Posted on Tuesday, 16th March, 2010

Another Analyst for Jumpstart

As our blog post in November mentioned. Karen Valentine has now joined the company as Technical Analyst taking our running total of analysts to six.

Karen is a technical writer and business analyst with over twelve years experience. She has worked on a number of different systems within the Energy & Utilities sector. Karen can effectively analyse R&D activity within companies and has developed a good understanding of the NETA and BETTA marketplace.

Karen joins the company with a First Class (Hons) in Computer Science, which means, to date, all members of staff have degrees excluding our Managing Director, Don Galloway. Don has noted this but is determined not to let it get him down – he plays a vital role in other aspects of Jumpstart’s development and keeping staff motivated. Just remember Don, Karen drinks tea with milk, no sugar!

Posted on Wednesday, 20th January, 2010

Good news for small and medium sized companies!

In the Chancellor’s Pre Budget Report on Wednesday 9th December he announced further improvement to help small and medium sized companies who are claiming for R&D tax relief. Previously these companies had to own the IP on their eligible activities; this requirement has now been removed. Great news and further strengthens the program, let’s hope more is on the way.

Posted on Friday, 11th December, 2009

Another Jumpstarter!

As mentioned in our November blog we are delighted to introduce Jumpstart’s latest recruit – Stephen Edwards.

Stephen joins the company after a year in Africa working in Niger along with his wife Karen and young son Rory. Stephen comes with a raft of qualifications – Diploma in Chemical Engineering, 1st Class Honours in Biological Sciences and a Master of Philosophy in Bioinformatics

Amazingly he can also make an excellent cup of coffee… but his tea is in need of improvement. You never stop learning!

Posted on Monday, 7th December, 2009

CBI’s support of the R&D tax credit program.

This months Blog post has a more serious note.

We were very encouraged to hear recent reports from CBI president Helen Alexander (above) of the organisations un-faltering support for the R&D tax credit program.

The business group wants the tax credit to be extended, and serious consideration to be given to introducing a “royalty box ” system – where revenues from certain areas of IP, such as drug patents, are taxed at a lower rate, encouraging investment.

Speaking at the CBI’s East of England annual dinner this month she said the development and exploitation of IP will play an important role in the UK’s economic recovery.

“We want to see future tax changes have to pass a test, which is: Will it make the UK a more attractive place for businesses to invest in, develop and exploit IP?” she said.

“We must have a stable and competitive tax framework if we’re to incentivise IP development and exploitation. Change and uncertainty undermine the confidence of those making long-term investment decisions.”

The UK’s current R&D tax credit scheme works well, but other countries are fast catching up, said Alexander.

“The US has recently decided that its R&D tax credit is such an important part of its business landscape that it will make the credit permanent. Competing with the US is never easy, and so any plans to remove the UK’s R&D tax credit should be rejected out of hand as dangerously short-sighted,” she said.

Let’s hope these views are also the views of government whoever that may be in the future.

Posted on Tuesday, 15th September, 2009