Editor's note: This story is part of the WardsAuto digital archive, which may include content that was first published in print, or in different web layouts.
The Society of Motor Manufacturers and Traders celebrates as the U.K. government announces a change to the research-and-development tax-credit system, sealing a victory for the automotive and broader manufacturing sector.
Chancellor of the Exchequer George Osbourne’s announcement comes after a campaign by the SMMT and the Engineering Employers Federation (EEF) to have the credit process revised.
A government transcript of Osbourne’s Autumn Statement – a sort of mini-budget – shows him saying he will introduce an “above-the-line” tax credit in 2013 to encourage R&D activity by larger companies.
“The government will consult on the detail at Budget 2012 and will ensure that (small- and medium-size enterprises’) R&D incentives are not reduced as a result of this change,” the statement says.
SMMT says the revision will help the U.K. automotive industry capitalize on its global reach, generating more R&D investment, safeguarding jobs and boosting the country’s status as a prime location to base high-skill operations.
“Reform of the R&D tax credit system propels the U.K. into a new league of global competitiveness, sending a strong signal to international investors,” SMMT CEO Paul Everitt says in a statement.
“The U.K. is already a center for innovation with advanced engineering and low-carbon expertise attracting major corporations to invest in the U.K.; this reform will enhance the UK’s investment appeal, create high-value jobs and drive economic growth.”
The EEF says the key benefits of moving to an above the-line credit are the creation of a simpler system; strengthening the link between the R&D tax-credit incentive and the parts of companies where investment decisions on R&D are made; and increasing certainty about the timing of the benefit of the R&D credit by decoupling it from a company’s tax profile.
In another boost for vehicle sales, Osbourne says January's planned 3-pence-per-liter ($0.18 a gallon) increase in fuel duty will be postponed until August, and a second hike of five pence a liter ($0.30 a gallon) that was planned for August will not take place.
“An average family will save around £144 ($225) on filling the average family car by the end of next year,” Osbourne says.
