Autumn Budget 2024: What It Means for R&D-Focused Companies
The Autumn Budget 2024, presented by Chancellor Rachel Reeves, outlined Labour’s vision for addressing the UK’s £22 billion fiscal shortfall through strategic investments and cost-saving measures. With £100 billion earmarked for R&D, infrastructure, and technology over the next five years, the Budget seeks to foster innovation while driving sustainable economic growth.
For innovative businesses, the steady R&D tax relief scheme offers a welcome pause from recent reforms, enabling companies to plan with confidence. The Budget also introduces notable changes to employer NICs, capital gains tax (CGT), and inheritance tax, which present new considerations for business owners.
Key Highlights for R&D-Focused Companies
Stability in R&D Tax Relief
The unchanged R&D tax relief scheme ensures continuity, enabling companies to leverage these incentives to fund innovation and growth. Industries such as technology, life sciences, and manufacturing can benefit from the stability, which allows resources to focus on advancing projects rather than adapting to constant legislative changes.
Strengthened Compliance Measures
HMRC’s increased efforts to reduce fraud in R&D claims are delivering positive results. The error and fraud rate has fallen from 17.6% in 2021-2022 to 7.8% in 2023-2024, thanks to targeted compliance programs. These measures protect the integrity of the R&D tax relief scheme, ensuring businesses that follow the rules can continue benefiting from these incentives.
£100 Billion for R&D and Infrastructure
The government’s five-year commitment to investing £100 billion in R&D, housing, science, and transport signals a strong push for long-term economic growth. Funding highlights include:
£975 million for aerospace R&D.
£2 billion for zero-emission vehicle production.
Up to £520 million for life sciences manufacturing.
These investments aim to strengthen the UK’s position as a leader in innovation across key sectors.
Green Innovation Incentives
Businesses focused on sustainability stand to gain from additional incentives for renewable energy, carbon reduction, and green technologies. Enhanced capital allowances and grants encourage eco-friendly innovation while aligning with the UK’s net-zero goals.
Tax Changes Impacting Innovative Businesses
Employer NICs Increase
The employer NICs rate will rise by 1.2 percentage points to 15% in April 2025, with a threshold reduction from £9,100 to £5,000. While smaller businesses can benefit from an increased Employment Allowance of £10,500, larger companies with ambitious hiring plans may face higher costs, requiring careful workforce planning.
Updated Capital Allowances
The continuation of full expensing for capital expenditures allows companies to immediately deduct 100% of qualifying expenses. This measure improves cash flow for businesses, enabling quicker reinvestment in R&D, technology, and infrastructure.
Changes to CGT and IHT
Adjustments to CGT rates and inheritance tax introduce new planning considerations for founders and investors. While these changes may affect exit strategies and legacy planning, the UK’s competitive tax environment continues to support R&D-focused enterprises.
What This Means for Founders and Innovators in the UK
The Autumn Budget 2024 provides a mixed outlook for innovative companies. On one hand, the stability of R&D tax relief and significant capital investments create opportunities for growth. On the other, tax changes like increased employer NICs could impact operating costs. Balancing these factors will be key for businesses aiming to maintain their innovation momentum.
If you’re looking to navigate the complexities of R&D tax relief, capital allowances, or other financial opportunities, Upstack is here to help. Contact us today to discuss how we can support your business’s growth and success.