The UK’s R&D landscape: opportunities and support for Indian businesses

The UK is a global leader in science, technology, and research and development (R&D). It has a world-class university system, a thriving start-up scene and a supportive government that is committed to innovation. This makes the UK an attractive destination for Indian businesses that are looking to expand their R&D capabilities.

Why the UK is interesting to Indian businesses

• Good universities for knowledge transfer: The UK has some of the best universities in the world, many of which offer cutting-edge research programmes. This provides Indian businesses with access to a wealth of knowledge and expertise.
• Easy accessibility to highly qualified technical staff: The UK has a large pool of highly qualified technical staff, including engineers, scientists and software developers. This makes it easy for Indian businesses to find the talent they need to support their R&D efforts.
• Supportive government: The UK government is committed to supporting innovation. It offers a range of financial and non-financial incentives to businesses that invest in R&D.

Funding for R&D in the UK

The UK government offers a range of funding options for businesses that are undertaking R&D. These include:

• R&D tax relief for SMEs: This scheme allows SMEs to claim a tax deduction for up to 33% of their qualifying R&D costs.
• R&D expenditure credit for large businesses and those undertaking contracted R&D: This scheme allows large businesses and those undertaking contracted R&D to claim a tax credit for up to 13% of their qualifying R&D costs. This will soon be increasing to 20%.
• Innovation grants (UK and Horizon Europe): The UK government offers a range of innovation grants to businesses of all sizes. These grants can be used to support a wide range of R&D activities.

What Indian businesses need to know about R&D tax relief

R&D tax relief is a valuable scheme that can help Indian businesses to reduce their tax bill. However, the scheme has strict eligibility criteria and claims must be properly documented.

Here are some key things that Indian businesses need to know about R&D tax relief:

• Ability to claim R&D that has been contracted to the business: Indian businesses can claim R&D tax relief for R&D that has been contracted to another business, including businesses based in India.
• Ability to claim for overseas workers for periods that start before 1 April 2024: Indian businesses can claim R&D tax relief for the costs of overseas workers who are engaged in qualifying R&D activities for periods that start before 1 April 2024.
• Additional complexity and challenges in making R&D claims due to the new “additional information form”: In 2023, the UK government introduced a new “additional information form” that must be completed when making an R&D tax relief claim. This form has added complexity to the R&D tax relief claim process and has led to some challenges for businesses.
• Crackdown on R&D claims from HMRC: The UK tax authority, HMRC, is currently cracking down on fraudulent R&D tax relief claims. HMRC is carrying out more audits of R&D tax relief claims and is imposing penalties on businesses that make false or inaccurate claims.

How Moore Kingston Smith can help

Moore Kingston Smith is a leading UK accounting and advisory firm that helps businesses claim R&D tax relief. We have a team of experienced professionals who help Indian businesses navigate the R&D tax relief claim process, ensuring claims are accurate and compliant. We also help Indian businesses identify and access other funding options for R&D, such as innovation grants.

If you are an Indian business that is considering expanding your R&D capabilities in the UK, please feel free to contact our dedicated India team or R&D team for an initial consultation. We would be happy to discuss your specific needs and advise you on the best way to proceed.