PwC comments on UK research and development tax credit regime

Nov 27, 2018

The Automotive Council UK has today released its report on  the International Competitiveness of the UK Automotive Industry. As part of the research, an in-depth global investment appraisal was carried out by the Automotive Council and PwC.  PwC UK worked with its global network to assess and appraise the research and development (R&D) funding offered in and around 30 key countries from an automotive perspective.

Diarmuid MacDougall, global R&D network leader at PwC, comments on the attractiveness of the UK’s R&D tax credit regimes:

“With Brexit at the door, it’s paramount that the UK remains an attractive destination for investment. It’s encouraging to see that the country still has one the best designed R&D tax credit regimes in the world, one that is particularly beneficial to companies either conducting research before bringing a product to market or appreciably developing existing products and processes.

“However, while access to the R&D tax credits is excellent, the funding picture is somewhat mixed. For every £100 spent on qualifying R&D costs, such as salaries or materials, a SME will receive back £25 - £33. This puts the UK ahead of countries including Japan, China and the US. But for larger companies, the regime is less appealing with businesses able to reclaim just £10 for every £100. This is below the likes of France (30%) and Spain (25%).

“At a time when continued investment is so important, the UK should strive to keep pace with competitor countries’ credit rates for companies of all size. From working with businesses  considering where to locate , we believe that more support for capital expenditure could also have a knock-on positive impact on UK job creation. If the UK is to continue to compete globally, targeted grant funding must also be reinvigorated.”

Notes to editors

Effective cash rates - small companies

 

Thailand

40%

France

30%

Lithuania

30%

Canada

26%

Ireland

25%

South Korea

25%

Spain

25%

UK

25%

Slovakia

21%

Czech Republic

21%

Brazil

20%

Poland

19%

India

17%

Japan

17%

South Africa

14%

Australia

14%

China

13%

Italy

13%

Russia

10%

Singapore

9%

Romania

8%

Mexico

8%

US

7%

Turkey

6%

Nigeria

5%

Bulgaria

0%

Germany

0%

 

Effective cash rates - large companies

 

Thailand

40%

France

30%

Lithuania

30%

Ireland

25%

Spain

25%

Slovakia

21%

Czech Republic

21%

Brazil

20%

Poland

19%

India

17%

Japan

14%

South Africa

14%

China

13%

Italy

13%

Canada

11%

Russia

10%

UK

10%

Australia

9%

Singapore

9%

Romania

8%

Mexico

8%

US

7%

Turkey

6%

Nigeria

5%

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