Plans for and above-the-line (ATL) R&D credit tax were announced last week in the budget which could simplify the way in which businesses claim R&D.

This comes as part of recent reforms in the move towards improving R&D tax credit for small businesses. David Gauke exchequer secretary at the Treasury stated that “overall, we would like a system for supporting R&D which is simple for both business and HMRC to administer. Reflecting this, we would also welcome your views on the existing large company scheme and whether it should be retained.”

The change in R&D tax credits is a welcome move for smaller businesses as they changes are expected to facilitate innovation and growth particularly in the technology industry. However, Mariana Mazzucato, Chair in Science and Technology Policy at the University of Sussex, warns that the government must introduce more structured ways of helping companies with R&D if it is to effectively encourage innovation. She says only 3% of the UK economy comes under high-tech manufacturing.