The last few months has been a roller coaster for most Small and Medium Enterprises (SMEs) trying to cope with the negative business impacts of Covid 19. However, for innovative companies that are fleet of foot, there have also been new Research and Development (R&D) opportunities being created.
Some commentators hold the view that overall, in the medium to longer term, there will be greater commitment to R&D funding. However there are others that doubt the ability of the UK to maintain its ambitions for R&D spending, set out by Chancellor Rishi Sunak in his Budget 2020 statement – which included plans to increase public R&D investment to £22 billion per year by 2024‑25. (We highlighted the Future Fund & Increased Grant funding through Innovate UK in a blog back in April.)
It is certainly the case that in some sectors innovation is being fast tracked by the opportunities thrown up to provide new solutions for problems created by the pandemic. “Just as World War Two is remembered for inventions such as penicillin and radar technology, it is highly likely that 2020 will be remembered for technologies developed to help fight pandemic disease outbreaks – isolation units, mobility tracking tools and many more. UK innovators are very much part of this fight and stand to reap the benefits of this effort in the future,” (Quote by Karl Barnfather, chairman of European intellectual property firm Withers & Rogers, published in an online article in Process Engineering).
Beauhurst in its mid-year UK equity market update (Equity Investment Market Update H1 2020) found that “Most sectors experienced a decline in deal numbers, including investor favourite’s fintech and artificial intelligence. But digital security and eHealth startups have thrived through lockdown.” Not surprisingly the report found that “Deal numbers declined, but not as much as we might have expected. A total of 911 deals were announced during the half year, a 3% decrease from the previous half and a 9% decrease from H1 2019. The total amount raised in H1 2020 totalled £4.77b — a 7% decrease from the previous period and a 30% drop from H1 2019. This remains the fourth highest level of funding raised in any half.”
On balance, my view is that investment in innovation and innovation funding for UK SMEs is going to be one of the bright spots in an otherwise quite uncertain economic future.
To check whether your recent or planned expenditure on Research and Development qualifies for R&D tax credits or relief contact us.
Blog by Linda Eziquiel, Regional Director, RandDTax