Autumn Budget 2024: R&D relief protected in Labour’s first Budget

By 2pm on Wednesday 30 October, all the speculation was over. The chancellor, Rachel Reeves, had delivered her first Budget; and the most significant tax announcement was the rise to employer National Insurance contributions from 13.8% to 15%.

This rise was compounded by a cut to the threshold at which this tax becomes payable from £9,100 to £5,000 per employee. It is a move which will cost UK businesses billions of pounds in extra costs.

The chancellor did commit to the government’s Corporation Tax Roadmap. Part of this included maintaining R&D relief for the duration of this parliament, within the following measures:

• A cap on the corporation tax rate at 25%;
• Maintaining the small profits rate and marginal relief at current rates and thresholds;
• Maintaining R&D relief rates, the Patent Box, full expensing and annual investment allowance.

2024 Budget and impact on R&D incentive

We are pleased to see that the chancellor will “protect” record research and development (R&D) investment, citing such public investment as “a crucial driver of long-term economic growth”.

Set against the context of several years of changes to the R&D tax credit schemes, this is most welcome.

It gives the UK’s innovative businesses confidence to continue investing in research and development, safe in the knowledge of the kind of support they can expect to receive through the Research and Development Expenditure Credit (RDEC) and Enhanced R&D Intensive Support (ERIS).

Of course, one of the qualifying costs within an R&D tax credit claim is for employer National Insurance contributions. This will offer some protection to innovative companies from this tax rise.

Going further, they have indicated they will develop 10-year budgets to provide long-term certainty and stability for key R&D activities.

2024 Budget and funding for R&D sectors

As part of the government’s protection of R&D budgets, £20.4 billion spending has been allocated to 2025-26.

Breaking this down, this includes £6.1 billion of support for core research; the full funding of the UK’s Horizon participation – which allows UK businesses access to the EU’s £80 billion R&D grant programme; £1 billion for aerospace; £2 billion for the automotive sector; and lesser sums for life sciences and other initiatives.

In the supporting Budget documentation, it was said that the government will soon publish an Artificial Intelligence Opportunities Action Plan. And that they are seeking to encourage more investment from pension funds into UK growth assets.

Autumn Budget 2024 R&D FAQs

Did the 2024 Budget make any changes to R&D tax relief?

No, the Autumn Budget 2024 did not make any changes to R&D tax relief. R&D tax relief was protected and the government regard it as a key area of public investment.

Did the 2024 Budget contain any news about R&D grants?

Yes, more than £20 billion was allocated for R&D spending in 2025/26. This included fully funding the UK’s Horizon participation, allowing UK companies access to EU R&D grants, as well as specified sums for certain industries and initiatives.

Was Patent Box mentioned in the 2024 Budget?

Yes, there was one mention of Patent Box in the 2024 Budget. As part of the Corporate Tax Roadmap, the government committed to maintaining the Patent Box scheme.

Kene’s views on the Autumn 2024 Budget

Given the uncertainty and speculation in the lead up to the Autumn 2024 Budget, and the purported £22 billion black hole which needed filling, it is a relief to see that R&D funding in the form of tax credits, funding and Patent Box was left alone.

That said, this Budget will not be looked back on fondly by businesses hit by the significant rise to employer National Insurance. But at least for innovative businesses there is some much-needed continuity in R&D planning, and protection of various funding mechanisms.

If you have any questions relating to the Autumn Budget 2024 and R&D tax relief, grants or Patent Box, please do not hesitate to contact our team of experts and we can help you understand your position.

Book a free consultation today.

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