Favourable tax regime supports growing UK space sector

The latest report from the UK Space Agency, published today, reveals that the UK space sector is growing by 6.5 per cent per annum, and now supports £250bn of output across the economy.

The report found that:

  • total income of the UK space industry grew to £13.7bn in 2014/15, equivalent to 6.5 per cent of the global space economy in 2014/15;
  • the industry is commercially-focused, generating just 13.9 per cent of its income from the public sector with sales to consumers (54 per cent) and businesses (32 per cent) dominating;
  • exports grew to £5.0bn in 2014/15, or 36.4 per cent of total income (up from 31.0 per cent in 2012/13) – almost 30 per cent higher than the UK economy;
  • total direct employment in the UK space industry increased at a rate of 6.0 per cent per annum to 38,522 jobs in 2014/15.
  • the industry is R&D intensive – with 8.1 per cent of direct GVA invested in R&D – over 6.5 times higher than the UK average. R&D expenditure in 2014/15 stood at £415m or about 3.0 per cent of total income in the industry, with the Space Manufacturing the most R&D-intensive segment.

Commenting on the report, Mark Nisbett, a Partner at RSM who specialises in the space and satellite sector said:

‘The UK space industry tends not to receive the recognition that it deserves. The fact is that it is a major contributor to the UK economy and is growing faster than many other sectors.

‘At a time when the government is trying to drive productivity across the UK economy, it’s notable that the space sector has one of the most highly productive and highly skilled workforces in the country. It is also a major exporter with more than a third of total income coming from export sales – almost 30 per cent higher than in the wider UK economy.

‘Part of the reason for the industry’s success is down to the UK’s tax regime which offers favourable incentives both in terms of research and development tax credits and the UK Patent Box regime. The UK tax regime currently compares very favourably with other jurisdictions, although it will be interesting to see how the Trump administration will choose to reform the US tax system.

‘Whilst the report also highlights challenges to be met, what is particularly encouraging from this survey is the sector’s optimism for the future. Seventy per cent of survey respondents indicated that they expect income to grow over the coming three years, 41 per cent of whom expect this growth to be more than 10 per cent higher than the previous three years. In addition, 57 per cent predict job growth and 54 per cent expect a growth in export sales. This reflects the real enthusiasm and drive from all involved that is obvious to those of us in the sector.

‘Longer term, the UK’s place in the international space sector also looks promising. Positive comments from ESA and the UK government, ongoing R&D investment from within the sector, and recent developments such as:

  • the recent launch of the £50m Seraphim Space Fund,
  • encouraging developments regarding the UK’s spaceport infrastructure, and the opportunities that brings around both providing and using low cost local launch capacity, and
  • the recent success of UK organisations in European innovation competitions,

suggest that the future for all parts of the sector looks very positive.’