R&D tax credits need to be open to ‘all firms’

tax_creditThe CBI has urged that research and development tax credits should be available to firms of all sizes.

The statement from the employers’ group was made in response to a report – Ingenious Britain – produced by entrepreneur, Sir James Dyson.

The tax credits are made either as a tax deduction based on R&D spending or, for certain loss-making SMEs, as a return for a cash payment from HMRC when the firms surrender their losses.

In his report, Sir James argued the case for restricting R&D tax credits to small and hi-tech businesses.

The report also recommended boosting the Enterprise Investment Scheme (EIS) so that it focuses on relief for investors who support technology firms.

However, the CBI said it believed that the tax credits should apply to all businesses irrespective of their products or sector.

Dr Tim Bradshaw, the CBI’s head of enterprise and innovation, said: “Science and engineering need greater backing if the UK is to create more skilled jobs and attract global investment. The report makes some positive suggestions, such as improving science teaching in schools.

“However, R&D tax credits should not be restricted to SMEs and high-tech firms, but should be available to companies of all sizes and sectors. This would encourage all businesses to grow through investment and innovation.

“Similarly, the Enterprise Investment Scheme (EIS) should concentrate on businesses with high-growth potential, rather than Dyson’s proposal that it focus on high-tech firms alone.”

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