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R&D tax credit 'vital during recession'

04 February 2009
Categories: News , R&D , Companies
Government must increase rate and range, insists CBI

The Government must commit to retaining its research and development tax-break scheme during the economic downturn, the CBI has demanded.

The business lobbying body said that ministers 'must resist the temptation to allow the much improved and user-friendly R&D tax credit to wither on the vine' because it is 'particularly valuable during a recession' and would 'send all the wrong signals if it were abandoned'.

New survey findings published by the CBI show that British companies doubled their savings on R&D under the scheme between 2005 and 2008 – and as a result, more than a third of firms have increased their research and development.

The figures also suggest that business confidence in the tax credit grew 'dramatically' over the past three years, when most firms’ claims were met in full.

It is now an important factor for companies when deciding where to base R&D operations, insisted the CBI, and it has improved the attractiveness of the UK as a destination for high-value investment and jobs.

The organisation added that during the economic downturn, it is important that firms are able to ‘invest in new ways to compete so they are better placed once an upturn comes’.

The benefits of R&D take time to materialise, claimed the CBI, which urged the Government to ‘think long-term, keep the incentive and continue improving it for the benefit of the whole economy’.

The trade body’s director-general, Richard Lambert, remarked that as the economy ‘seeks to re-balance over the months ahead’, the Government should ‘go further’ by extending the rate and range of the R&D tax credit, enabling more companies to apply.

‘All of our major competitor countries have and value such a scheme. Losing the tax credit now would be a real blow and could seriously affect Britain’s overall R&D investment,’ said Mr Lambert.

Categories: News , R&D , Companies
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