Report: Skills tax credit could unlock £2.2 billion in additional skills investment

New research commissioned by Enginuity and produced and published by the Learning and Work Institute reveals how a skills tax credit could unlock £2.2 billion in additional employer investment in skills.

The Tax, Skills and Investment Report explores the barriers engineering and manufacturing SMEs face when investing in training, and how targeted tax relief could help businesses develop the skills they need to grow.

Nearly all employers surveyed recognised that greater investment in training could bring benefits such as faster technology adoption, higher productivity and increased business revenues. Yet many face barriers to making that investment.

The research finds clear appetite for financial support, with two in five respondents indicating that tax relief could increase their skills investment by as much as 29%.

Unlocking greater investment in skills

The report recommends a skills tax credit offering businesses 20p for every £1 invested in eligible training. It estimates that an initial £900 million investment from the Exchequer could unlock £2.2 billion in additional employer investment across the UK.

It also makes clear that financial incentives alone cannot address every skills challenge. Practical support and improvements to the quality of accredited training would need to sit alongside any new relief.

Through the Policy Centre for Supply Chain and SMEs, Enginuity will build on the findings with partners and Government to explore the feasibility of a skills tax credit and strengthen the evidence of its potential impact.

Download the Tax, Skills and Investment Report