Policy and funding
Spring budget promises green shoots for R&D spending
23 March 2022
IOP welcomes moves towards a more generous tax deal for physics research and development but warns more still needs to be done.
Delivering the Spring Budget today, the Chancellor Rishi Sunak committed to increasing the scope of the research and development (R&D) tax relief system.
Against the backdrop of difficult spending decisions as the UK recovers from COVID-19 and faces the economic impact of war on the European continent, this commitment is being interpreted as a vote of confidence in the science and business sectors.
From April 2022, R&D in the areas of pure maths and cloud computing, including storage costs, will be eligible for relief. This comes after the Treasury’s recent consultation on the scheme’s accessibility and scope.
This measure will enable more of the R&D completed by the physics community to be supported by the reliefs – cutting costs, unlocking the benefits of innovation, and encouraging further R&D activities in vital areas such as AI, quantum computing, robotics and across manufacturing.
However, the IOP has argued that investment into R&D must stay on track to hitting 2.4% of GDP by 2027 in order for the associated benefits to be realised.
Falling behind these targets risks the UK falling short of science superpower status, at a time when innovation could be the key to economic recovery.
Commenting on today’s announcement, Tony McBride, the IOP’s director of policy and public affairs, said: “There is no doubt that increasing the scope of R&D tax reliefs will benefit the physics community around the UK. From academics to businesses, innovators will be better supported in their R&D activity from April – this will create real-life benefits.
“This will help physics innovators to complete more R&D and deliver more impactful innovation, in areas which can transform our society. However, we mustn’t stop here. R&D investment targets must be hit, on time, if the UK is to thrive economically and internationally.”
The IOP previously called for the Treasury to increase the scope of these credits, alongside calls to simplify the schemes, and improve cohesiveness in the system.