Why Is The Government Changing The R&D Tax Relief Scheme

The following is a quote from the UK government, which spells out why the UK R&D tax relief scheme needs to be changed.

‘The UK has one of the most generous R&D tax relief systems in the world, spending, as a percentage of GDP, more than any other country in the OECD. Since 2007 spending has increased from 0.05% to 0.34% of GDP in 2019. Despite this, the level of investment in R&D in UK businesses has lagged behind other countries.’

So, in 2019, the UK is was spending approx 7 times the amount on R&D Tax relief as it did in 2007, with apparently little impact on the amount of R&D undertaken in the UK.  To put these figures in context, the UK is spending approx 2% of GDP on defense, which is only 6 times the amount spent on R&D tax relief! This would seem to indicate a system in need of immediate reform.