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There are just three more days until polling for the 2019 General Election (GE) begins. If you're unsure who you'll be voting for, you're not alone - 13% of the electorate are still undecided, according to recent figures

Party manifestos can help cut through some of the noise during an election campaign. They outline the key policies that political parties pledge to keep if they win the election. However, the Conservative, Labour and Liberal Democrat manifestos are a whopping 264 pages combined. It's hardly a surprise most people don't find the time to sit down and read them cover to cover!

Fortunately, we've done that for you. So, what do the main parties have to say about research and development (R&D) tax relief? In this article, we'll summarise their intentions for the SME and RDEC schemes. Neither the Greens nor the Brexit Party mention R&D in their manifestos, so we'll skip them for now.

Conservatives

The Conservatives are currently ahead in all of the polls, which makes them the favourites to form a majority government when the GE results are called on December 13th. An Opinium poll places the gap between the Tories and Labour at 15 points. With Boris Johnson tipped to stay on as Prime Minister, let's start with the Conservative manifesto on R&D. 

The Tories have promised to expand the current R&D tax scheme, increasing the current 12% tax credit rate up to 13%. It's worth noting that this refers only to the RDEC scheme, which is designed for large companies of 500 or more staff that have either a turnover of €100 million or more, or gross assets exceeding €86 million. 

Johnson's party is also committed to reassessing how R&D is defined. To quote directly from the manifesto, the Conservatives want to "review the definition of R&D so that important investments in cloud computing and data, which boost productivity and innovation, are also incentivised". 

The pledge is likely to please the Coalition for a Digital Economy (COADEC). Dom Hallam, the organisation's chief executive, has previously urged the government to consider new rules for tech start-ups that could help them compete on the international stage.

"In our survey, 68 per cent of start-ups considered use of cloud storage a key R&D cost, and 82 per cent said they thought of user interaction or user experience development a core part of their development process - but it's extremely hard to claim for either," he wrote in an article for the New Statesman.

"Not only that, but AI start-ups find themselves unable to access the credit for the cost of the data sets they need to train their algorithms – unlike their counterparts in Denmark & South Korea. Companies should be able to claim for all of these."

Labour

Labour may be trailing in the polls, but pollsters hardly have an impeccable record over the last few years. They failed to predict the Tory's 2015 GE majority, as well as the Leave result for the EU Referendum the following year and Donald Trump's US presidential victory just a few months later.

Still, a Labour majority seems very unlikely. But a hung parliament could see Jeremy Corbyn's party try to either rule as a minority government or form a coalition pact with the SNP or the Lib Dems. And it's fair to say their plans for R&D tax relief are much more radical than the other main parties.

According to the Labour manifesto, the party intends to set a target of 3% of GDP being spent on R&D by 2030. However, they are expecting to phase out the RDEC scheme while keeping SME-based tax credits (for the meantime). The money saved from scrapping tax relief for large organisations would go towards Innovate UK, an agency responsible for grant finance, and a new National Investment Bank. In other words, tax relief would be replaced with direct funding.

The details are set out in the Funding for the Future booklet, which outlines how Labour expects to pay for its public spending should it form a government. More than 7,200 RDEC claims were made in 2016-17, comprising 42% of tax credits paid out. Labour's policies could therefore have a significant impact on big organisations looking to innovate products and services.  

There may also be a knock-on effect for SMEs, as some smaller organisations are required to claim for tax relief through the RDEC scheme. For example, firms working on projects as sub-contractors for larger businesses can't claim for SME tax relief. There were at least £225 million worth of SME claims within the RDEC scheme for the 2017-18 tax year, according to HMRC. 

Lib Dems

The Lib Dems and leader Jo Swinson started the election campaign in high spirits and were confident of capitalising on the Remain vote by positioning themselves as the anti-Brexit party. In recent weeks, even the most die-hard Lib Dem voters will have accepted the party's chances of winning an outright majority are microscopic. 

Most polling companies have them tracking at around 13% of the vote (compared with 43% and 33% for the Conservatives and Labour, respectively). Furthermore, the Lib Dems say they will not enter a coalition with the Tories and would only partner with Labour if the party removes Corbyn as leader.

Against this backdrop, it's difficult to see a scenario in which the Lib Dem can deliver on its manifesto promises. That said, stranger things have happened, and tactical anti-Tory voting nationwide could see the Lib Dems increase their seats in parliament. So, what's the party's position on R&D tax relief?

Swinson's party seem to have opted for a mix of the Labour and Conservative positions. Like Labour, the Lib Dems want to increase national spending on R&D up to 3% of GDP, with an interim target of 2.7% to be achieved no later than 2027. However, unlike Labour, the party seems to have no intention of changing the fundamentals of the existing R&D tax relief scheme. 

Similar to the Conservatives, the party has committed to expanding support for tech companies. The manifesto says companies will be allowed to make R&D claims against the cost of purchasing datasets and cloud computing.

There are two other paragraphs relating to R&D in the Lib Dem manifesto. One pledges to support the growth of new jobs and businesses in tech by "simplifying the regulatory landscape and speeding up regulatory change". The other outlines a promise to support innovation by "doubling innovation spending across the economy". However, it's not clear at this stage what these declarations mean for the R&D schemes. 

Looking ahead to 2020

Public trust of politicians has never been high, but our cynicism has reached record heights in an era of fake news, social media and the seemingly never-ending Brexit impasse. More than three-quarters (78%) of people said politicians were untrustworthy in a recent study, making them by far the least credible occupation. To provide some perspective, journalists came second with 38%, less than half as many negative responses. 

Nevertheless, here at R&D Tax Shop, we encourage any party policies that support start-ups, foster innovation and drive businesses - big or small - to deliver the science and technologies of tomorrow. With changes potentially afoot, there has never been a better time to check whether or not your business is entitled to R&D tax relief. To see if you're eligible, please contact us today for a free initial consultation.