’With low growth forecasts, there is no room for mistakes and no time to lose,’ says chief executive
The insurtech sector has welcomed government plans to simplify research and development (R&D) tax reliefs.
In the Autumn Statement yesterday (22 November 2023), Chancellor Jeremy Hunt said the existing R&D expenditure and SME schemes will be merged, with expenditure incurred in accounting periods beginning on or after 1 April 2024.
In turn, the tax rate will be reduced from 25% to 19%, while the threshold for R&D intensive loss making SMEs will be lowered from 40% to 30%.
Melissa Collett, chief executive at Insurtech UK, said that the trade body welcomed “any changes that simplify the process”.
And Founders Forum Group chief executive Carolyn Dawson added that insurtech founders “across the UK will be cheered by today’s Autumn Statement”.
“[It promises] simplification, reflecting a new and pragmatic approach to R&D tax credits from the chancellor,” she said
“R&D credits are critical for the UK’s innovative startups.
“While we await the full detail, we hope today’s announcements will turbo-charge a generation of small and early-stage businesses, who may now find it easier to access the vital funds to develop groundbreaking ideas and maintain the UK’s position as a hub of global innovation.”
This came after Hunt announced a partial reversal to (R&D) tax credit cuts for SMEs in his Spring Budget.
Hunt explained in March that eligible private firms spending over 40% of their money on R&D would be able to claim back £27 from the Treasury for every £100 spent on R&D.
In his Autumn Statement last year, Hunt had announced plans that would effectively have reduced this figure to between £18.60 and £21.50 for every £100 spent.
While this represented an improvement, Collett said that changes to R&D in the past have had a “negative impact” on her firm’s members.
Therefore, she urged the government to provide “clarity” over the scope for its latest plans.
”The change in approach on R&D policies have proven extremely problematic for some of our members so any streamlining of processes and clarity of its scope, whilst ensuring cost effectiveness, is something our members are always keen to see,” she added.
”It’s a very complex area to navigate.
”We will continue to advocate on behalf of members to make it easier for insurtechs to benefit from R&D, whilst reducing the administrative burden associated with claiming tax credits and responding to queries from the authorities.”
As part of the most recent Autumn Statement, the government said that it wanted to ”embrace the opportunities presented by making greater use across the public sector of cutting-edge technology like artificial intelligence (AI)”.
Earlier this year (24 April 2023), the government announced an AI taskforce would develop its “safe and reliable” use and ”ensure the UK is globally competitive in this strategic technology”.
Julian David, chief executive of technology trade association TechUK, said: “Encouraging the adoption of digital and AI technologies among small businesses will be of huge importance to our future growth and productivity and therefore the newly announced digital adoption taskforce needs to deliver.
“This statement has significant potential to boost investment from the tech sector. However, with low growth forecasts, there is no room for mistakes and no time to lose.
”The government needs to work at pace alongside the tech sector to put these policies into action and get growth going.”
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