Dezeen Magazine

UK designers are missing out on innovation tax breaks, says thinktank

UK designers are missing out on innovation tax breaks, says thinktank

Business news: nine out of 10 design businesses in the UK are failing to take advantage of tax relief rules that could benefit them, according to the head of a design policy thinktank.

Jack Tindale, manager of the All-Party Parliamentary Design and Innovation Group (APDIG), urged architecture and design firms to ask their accountants about research and development (R&D) tax relief – a scheme that allows firms to claim back £230 for every £100 spent on innovation.

"Only six per cent of firms that could claim for it actually do," Tindale said.

Small firms are particularly missing out, he added. "If you are employing fewer than 50 people, if you have a turn over less than two million pounds a year and you're doing something in the design and innovation sphere, you almost certainly can claim for it."

He added: "There's a heck of a lot of money out there that is there basically to help the sector grow and help firms grow."

R&D tax relief is a government initiative designed to encourage firms to develop innovative products and services. Under the scheme, firms can claim 230 per cent of innovation expenditure against tax.

APDIG, together with the Design Business Association (DBA), is calling on the government to extend the R&D tax credits scheme to make it easier for design firms to benefit from it.

Under current rules, firms who are subcontracted by other firms cannot claim credits for the work they do. In a joint submission to the UK Treasury, the two organisations called for the scheme to be expanded to include the entire supply chain.

"At the moment, when a design firm wants to sort of outsource part of their project to a specialist agency such as a 3D printing firm, that doesn't technically count as research or development under Treasury rules," Tindale said. "Allowing this would fill an obvious gap in the sector, really helping the sector to grow."

APDIG and the DBA made the submission to the Treasury ahead of the government's autumn statement, in which it sets out tax and spending priorities for the year ahead.

This year's statement, due to be delivered on 23 November, will be watched particularly carefully for clues as to how the government plans to help UK businesses through the uncertainty and disruption of Brexit.

"There are a number of tangible impacts that the Treasury could deliver for the design industry in the autumn statement," said DBA chief executive Deborah Dawton.

Expanding the scope of what can be claimed against R&D tax credits with clear unambiguous guidance is just one essential recommendation. But there's also an opportunity for us to lead the world as a country of innovative businesses and public services.

"If we raise awareness of the value of design into the private and public sector, and create the conditions within which design and innovation can flourish, we can fundamentally improve the outlook for UK businesses to compete on a world stage."

APDIG is an organisation that brings together members of parliament from all political parties and non-political design organisations. It develops policy ideas that benefit the design sector, critiques government policy and helps designers engage with politicians. Its president is architect Richard Rogers.

The DBA is a trade body for design businesses in the UK. It is a signatory of Dezeen's Brexit Design Manifesto.