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17/03/04
Budget Disappoints UK Hi-Tech Industry – "We're still below the noise level", says Intellect
Intellect, the trade association for the UK IT, Telecoms and Electronics Industry, has expressed its disappointment that the Chancellor, in his 2004 Budget, has failed to increase the effective R&D tax credit rate, stating that it is still below what it calls the 'noise level' of real incentive. The trade association argues that even with the confirmation of a limited widening of allowable costs, tax credits are still not aggressive enough and will fail to provide British companies and multi nationals with the incentives they need to invest in the UK as an R&D base.
Tom Wills-Sandford, Intellect's Director of Campaigns said, "This Budget has left us seriously concerned about the outlook for the UK as a base for research and development and innovation." "The widening of allowable costs for R&D, and the clearer definition of R&D (both measures Intellect has consistently campaigned for), will hopefully bring greater levels of certainty to R&D decision makers. However, even with a widening of the range of allowable costs, the UK tax credits scheme still fails to pass the 'noise level' test."
"However, we welcome the Chancellor's plan to produce improved guidance in support of the tax credits. There are signs that the Revenue still does not understand the nature of Software Development and the vital role it plays in innovation, and so we will be examining this new guidance to ensure that it will make it easier to claim the credit, particularly for software R&D. We are delighted that there will be improved statistics on the credit, as this will enable the UK to successfully measure its relative attractiveness as a base for R&D against international competitors."
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