Tax incentives and R&D: an evaluation of the 2002 UK reform using micro data

Irem Guceri ()
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Irem Guceri: Oxford University Centre for Business Taxation

No 1511, Working Papers from Oxford University Centre for Business Taxation

Abstract: The United Kingdom introduced an R&D tax incentive scheme rst for SMEs in 2000 and then for large rms in 2002, gradually increasing the generosity of both schemes after 2008. This study exploits the differences between companies with similar characteristics that were just above the size threshold for eligibility to the SME scheme and those that were just below, before and after the 2002 reform. This allows for a difference-in-differences approach to measure the (additional) impact of the tax incentives on firms around this size threshold. Treatment group firms are found to have increased their R&D spending by around 18 percent on average in response to the large company tax incentive, implying a user cost elasticity of -1.35. We do not find significant differences in this effect between sectors.

Keywords: R&D; tax credits; difference-in-differences (search for similar items in EconPapers)
JEL-codes: H25 O31 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-acc, nep-ent, nep-eur, nep-ind, nep-ino, nep-pbe, nep-pub and nep-tid
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Citations: View citations in EconPapers (3)

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