RESEARCH and development (R&D) spending jumped by 10 per cent in the year after the rules on tax credits were eased, according to research out today from accountancy firm UHY Hacker Young.
Spending hit £13.2bn in the tax year 2012-13, the latest for which the data are available – the highest level it has ever reached.
That represents a rise of 10 per cent from the £12bn invested in R&D in the previous 12-month period, according to data gathered from tax credit receipts.
And the growth spurt was even sharper for small firms – SMEs’ R&D spending soared by 42 per cent on the year to £595m.
“R&D investment is bouncing back from its depressed levels during the recession,” said Matthew Hodgson, a partner at UHY Hacker Young.
“Recent adjustments to the tax credit system have given SMEs a substantial lift and have led to increased levels of R&D investment.”
“If the UK is to see sustainable growth and maintain its competitive position then this level of investment must continue.”
One key change was cutting the £10,000 annual threshold at which firms can claim R&D tax credits, opening the scheme up to thousands of small firms which may otherwise not have made the investment.
Most R&D spending is invested in London and the south east. The capital accounted for 31 per cent of tax credits claimed, while the south east claimed 23 per cent.
The east of England came a distant third, claiming 12 per cent of the R&D tax credits in the same year.