UK Chancellor Gordon Brown has announced an increase in the tax credit designed to encourage R&D spending by large companies - but IT suppliers' body Intellect warned that the extra 5 percent was not enough.

Brown's Budget increases the large company R&D tax credit from 125 percent to 130 percent, beginning in April next year.

But Tom Wills-Sandford, deputy director general of Intellect, said the increase would amount to around half a percentage point in real terms.

Intellect figures suggest that only around half the elements in R&D projects are eligible for tax credits, while the cut in corporation tax announced in the Budget, reducing it from 32 percent to 30 percent, will further lessen the impact of the tax credit.

See Computerworld UK for more.