The Government Increases Support for British Business

In his Autumn Statement Chancellor George Osbourne has announced significant improvements to the R&D Tax Relief available for both SMEs and Large Companies.

R&D Relief for Corporation Tax allows businesses who are engaged in relevant activity to augment the value of their R&D expenditure in order to reduce their Corporation Tax liability. The scheme is particularly valuable to SMEs, but is often under-utilised as many businesses have been advised their activity is not eligible, or believe that the scheme is too complex. 

The improvements announced this week demonstrate the governments commitment to supporting both the scheme and UK business. With the average claim value over £40,000 this can make a significant difference to the bottom line, and companies which have engaged with the scheme are often able to invest in new staff and purchase additional machinery and infrastructure to further support their development initiatives.

New Support for SMEs

The uplift rate for SMEs will improve from 225% to 230% from April 1st 2015 providing a benefit of 26% of relevant expenditure. This means that all activity undertaken after this date will benefit from the new higher rate. If you haven’t yet claimed however don’t wait, as there is a time limit of two years to claim for historical R&D activity, and you can claim for qualifying work in subsequent years.

Large Companies and grant funded SMEs also benefit, with the rate moving from 10% to 11% under the RDEC scheme. The loss-making rate for a payable tax credit remains the same for SMEs at 14.5% meaning a cash credit of 33.35p for every qualifying pound spent. 

For more information contact our team of R&D tax specialists.

Written by

Alex Atkin