Reforms to research and development

Twenty-three years ago an obscure allowance a ‘scientific research allowance’ was swept aside in favour of a new ‘research and development’ (R&D) tax deduction intended to encourage more investment in R&D by innovative UK companies. The ‘development’ leg of the incentive produced a huge rise in the number of small and medium-sized enterprise (SME) claims. Last week in his Autumn Statement chancellor of the exchequer Jeremy Hunt announced measures to take the initial R&D incentive schemes relief almost full circle back to where it had begun in 2000 with a ‘one size fits all’ UK R&D incentive scheme effective from 1 April 2024.

If we are to regard this move as something ‘new’ cast back to 1995 when the Parliamentary Office for Science & Technology was devising the UK’s first R&D tax incentive scheme and note in particular the consideration...