South West business chiefs urged to seize innovation incentives to boost region’s hotbed status

Pioneering South West business leaders can strengthen the region’s status as a hotbed for innovation after the General Election – if they take advantage of investment incentives.

That’s the message from South West-based accountancy practice Albert Goodman which is urging entrepreneurs to make the most of multi-million pound research and development (R&D) tax relief.

It is estimated £375 million in R&D tax relief was claimed by South-West businesses in the 2021-22 tax year with over 65 per cent of this benefiting businesses in the manufacturing, information and communication or professional, scientific and technical sectors.[1]

Now Bristol-based Albert Goodman tax specialist Sam Wood is urging company chiefs to get ready to act in the wake of the July 4 poll, to boost growth and cement the South West’s reputation as an economic powerhouse.

Wood, who is based at Albert Goodman’s city centre office, said: “There’s been a lot of uncertainty around research and development tax relief following the significant changes to the incentive, but my message to the business community would be to not let this recent turbulence deter you from obtaining key funding.

“R&D tax relief is fundamental to so many businesses across the South West in markets from aerospace and animation to life sciences and software development. Regardless of who wins this election, the incentive should still remain a central, strategic point for small businesses.”

Albert Goodman will be making sure its clients do not miss out on crucial tax credits which can prove invaluable to start-ups and scale-ups.

Wood continued: “As a region, the South West is a hub of innovation across a rich diversity of sectors feeding into the UK’s wider R&D effort.

“Central to this success are the universities in Bristol, Bath, Exeter and Plymouth which are using expertise and experience to foster an array of start-ups and spinouts in the early stages of their innovation journey.

“It is encouraging that both the Conservative and Labour parties recognise the importance of rewarding innovation to ensure the UK remains competitive and attractive in the global environment.

“But care will need to be taken to ensure that, whoever wins the General Election in July 2024, a carefully balanced environment of an attractive relief and a well-directed compliance strategy from administrators of the tax incentive encourage rather than stifle innovation.”

Ahead of the General Election, the Conservative and Labour parties have issued their commitments to support UK tech companies and Wood remains hopeful that those commitments will boost the momentum of up-and-coming companies. Neither Party has sought to instigate further change to the R&D tax incentive system itself, which has already undergone a new evolution.

Sitting alongside R&D Tax relief are various other incentives or funding opportunities that remain an important of policymaking for Government.

Grant-funding opportunities in the South-West have seen quantum computing companies in Bristol taking advantage of enhanced funding. There has also been a greater take-up of the Innovate UK Launchpad programmes with a focus on marine and maritime industries in the South-West. Total Innovative UK Launchpad funding looks to increase by an additional £44m in 2024.

The Conservative Party’s “Advanced Manufacturing Plan”, announced in their manifesto, seeks to provide a £4.5 billion commitment to secure strategic manufacturing sectors including automotive, aerospace, life sciences and clean energy. The Conservatives have also committed a further £1.6 billion of funding via the Catapult Networks aimed at technology and innovation centres.

Meanwhile, Labour has conceptualised its National Wealth Fund which seeks to invest over £7 billion in clean energy through incentivising ports, gigafactories and carbon capture. Labour have also announced that they wish to work with “universities to encourage them to offer spinouts a ‘founder-track’ option, one where the university takes a share of equity at or below 10 percent” helping them scale with better access to funding.

Wood concluded: “The South West remains at the forefront of technological innovation and to maintain that momentum my message to business leaders would be not to hold back on your endeavours to seek funding and be aware of the incentives available to you that you may need to drive those R&D ambitions.”

[1] Statistics taken from Accredited official statistics (published September 2023): Link Corporate tax: Research and Development Tax Credits - GOV.UK (www.gov.uk)