The UK has a great record of R&D, contributing 25% of the top prescription medicines, and home to many recognized experts in AI and machine learning technology. However, as a whole, the UK invests just 1.7% of GDP on R&D. Leading nations such as South Korea are investing 4.3% and the OECD average is just over 2.3%. It’s been shown that every pound spent on medical research delivers an annual return of 25 pence every year thereafter. Despite the ongoing benefits of R&D, the investment is just not there.

In the recent budget released in March, the UK has pledged to raise this investment to 2.4% by 2027, which still falls short of the leading nations. But how are they planning on reaching this goal? The Chancellor pledges to review the R&D tax relief scheme, hoping to enhance and broaden the horizons. The government reports that their new budget will bring government invested funding in R&D to £14.9 billion in 2021/22 . With the inclusion of the 130% super deduction in the budget, they are hoping investment spending could accelerate R&D.

Companies also often limit themselves, falling prey to the assumption that R&D is limited to those in lab coats. A new product, service, or process could qualify. Even a failed project might have started with R&D. The benefits that companies get from the R&D tax credit relief schemes can provide them with capital to invest back into their business, creating a cycle of innovation and improvements. 

If the UK hopes to catch up to nations leading in R&D, it’s on the companies to actually perform the research, and on the government to help fund it. It seems the budget will make room for increased R&D – so if you own a business, you might want to consider claiming or getting involved in some innovation!

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