The UK Governments Industrial Strategy and R&D Tax Credits
Industry Insights: The Growing Opportunity in the UK Engineering Industry
Article Written by Simon Dodd: 05/02/2018
2018 is the UK’s ‘Year of Engineering’ which aims to encourage more youngsters to join the engineering career ladder.
It has been recognised by the UK Government in their Industrial Strategy (and with the support of no less than 38 professional engineering bodies) that with Brexit drawing ever closer, the UK needs to build on our past successes as an engineering powerhouse to reaffirm our position as a world leader when it comes to leading innovation on a global scale.
Stimulating youngsters to look at engineering as a viable and long-term, often lucrative career prospect will be vital to the UK’s economy post-Brexit.
Engineering related sectors contribute at least £486 Billion annually to the UK economy, and account for almost 50% of UK exports.
So, it is vital that the UK continues to build on the strengths of this sector to make the UK an attractive prospect for investment from overseas and to underpin our position as a renowned and respected leader on the world stage.
To encourage UK businesses to continue our countries long and proud history of helping to shape a better world, the UK Government provides businesses striving to overcome obstacles that will lead to an advance with valuable tax relief.
The engineering sector is responsible for a huge 20% of UK employment and that percentage is expected to continue growing steadily.
The UK has a long and proud history for providing world-class products and services that have a pivotal role in shaping tomorrow’s world for the better and the UK Government is keen to continue this trend.
It is interesting to learn that around 25% of the world’s top 100 prescription medicines were researched and developed in the UK. (Source: BMI Research, “United Kingdom Pharmaceuticals & Healthcare Report, Q1 2016” p. 61.)
The UK Government’s industrial strategy is clear that engineering will provide the UK a strong back-bone when it comes to trading on a global basis and it continues to encourage academic institutions and the private sector to seek advances by investing in Research and Development (R&D).
It is a fact that companies who consistently invest in R&D are 13% more productive than firms that don’t invest in R&D. (Source: Cable, V (2014) Innovation and the UK knowledge economy)
Where Is Investment in R&D Being Made Nationally?
The UK Government have cited that they intend to make the UK 'fertile ground' for investment from overseas and one of the ways it will do this is through its continuing investment and commitment to R&D tax credits that are a valuable form of tax relief for UK Limited companies subject to Corporation Tax.
UK companies seeking to further their industry by working to overcome any problems that could lead to an advance are able to recover substantial sums of their investment back from central Government, but to maximise their return, it is vital to utilise the services of an R&D tax credit specialists, like those at Hamilton Wood & Company.
Interestingly, with continued investment in UK engineering, this presents many employment opportunities.
At the time of writing this article, the UK needs 186,000 workers with engineering skills annually every year until 2024. This represents a huge opportunity for the UK to emerge from Brexit stronger, and more capable through advances in science and industry that will make our products and skill highly desired on the international stage.
When you look at the engineering industry in detail, there is an all too evident shortfall of the number of women who enter engineering as a viable, long term career path, and encouraging more women into this exciting career is a particular focus within the industry at present.
Karen Holford, deputy vice-chancellor of Cardiff University and recently awarded a CBE for services to engineering and advancement of women in science has recently stated that only 13% of those people choosing engineering as a career are women, although in Cardiff the uptake is substantially higher than the national average with an uptake of engineering by females an impressive 24%. More on the chalenges within the Engineering Industry can be found here.
Image Source Source: EEF
39% of UK firms have difficulties recruiting staff with skills in science, technology, engineering and mathematics. (Source: 16. CBI/Pearson (2014) Gateway to growth: CBI/Pearson education and skills survey 2014.)
To help industry draw on a the full potential of the UK talent pool, recommendations have been made by 38 UK engineering professional bodies to make world-class Science, Technology, Engineering and Mathematics (STEM) education freely accessible to all, regardless of ethnicity and socioeconomic backgrounds.
So With All the Positive Changes Happening, How Can R&D Tax Credits Help the UK Engineering Industry?
Well, when a UK company is seeking an advance using any science and/or technologies, in a way that hasn’t been done that way before, then there are extremely compelling reasons to invest in R&D.
Firstly, if your company is making a loss, then for every £100k of qualifying expenditure identified, then you will receive an immediate tax rebate of £33,350.00.
If in profit, for every £100k qualifying spend identified, then you can expect a massive £26,000 reduction off you next Corporation Tax bill.
If you would like to find out more about where R&D tax credits can help your business, please call one of the experts at Hamilton Wood & Company now on 0161 791 1401.