Insurance industry could benefit from extra R&D funding and increased tax credit

A further £2.3bn has been allocated for investment in research and development and the main R&D tax credit has increased to 12%.

This will take total direct R&D spending to £12.5 billion per year by 2021-22.

The Chancellor made the announcement during his Budget speech this afternoon.

In the official Budget document, the government states that the extra funding will be for:

• “Supporting our creative and digital industries by developing pioneering immersive technology for creative content, and launching a new AI and machine-learning programme targeted at the services sector
• £170 million for innovation to transform productivity in the construction sector
• new support to grow the next generation of research talent and ensure that the UK is able to attract and retain the best academic leaders globally”

Insurance start-ups and insurtech companies will also be happy with the increase to R&D tax credit, which frees up an extra 1% of their expenditure as the tax credit will rise from 11%to 12%.

Rodney Bonnard, UK insurance leader at EY said: “The increase in R&D tax credits will be welcome for companies investing to transform themselves into digital businesses.”

Stephen Brown, a partner at Mazars said: “With the insurance industry’s huge investment in technology, including a growing number of Insurtech companies, they will benefit from the increase in R&D allowance to 12%. It is therefore more important than ever that those in the insurance industry make sure that they are getting the full benefit of this potential tax relief.”