Research and Development Tax could help economy say SMMT & EEF
- Published on Tuesday, 08 November 2011 11:53
- Posted by Scott Buckler
A reformed system of research and development tax relief could help to increase economic output by £3.1bn over the next 30 years - and create more than 30,000 jobs - according to the the Society of Motor Manufacturers and Traders (SMMT) and the Engineering Employers Federation (EEF)
Changing the system of tax credits could prevent jobs going to countries where the tax credit system is more attractive to investors, say the industry bodies - who are basing their claims on a PwC report released today.
The cost of changing R&D; tax rules is estimated at £205m a year - but it is suggested that this could lead to an increase in annual investment and economic output of several times that sum.
In a joint submission to the government, the business groups said that investment could be increased by replacing the current system of research and development tax credits with cash benefits - or a system of credit that could be redeemed when development costs arose.
Tim Bradshaw, the CBI head of enterprise and innovation, said that a change in the tax system would help to bring more investment to the UK.
"This is a welcome contribution to the debate on how to build and retain high value R&D; activity and jobs in the UK," said Mr Bradshaw. "The UK's international standing as a place to invest would be significantly enhanced if currently non-profitable companies could gain more immediate benefit from the R&D; tax credit. This is possible by introducing a payable element for all companies."
He added: "A payable element would allow companies to factor the credit into R&D; investment decisions independent of their position in the business cycle and should provide a real boost to the economy."