Research & Development Gets a Boost - Mazars - United Kingdom
Research & Development Gets a Boost
Both the SME and large company R&D schemes get a boost in the Finance Bill.
06/12/2011
Small companies and SMEs
The increase in the rate of R&D relief for SMEs has been confirmed as increasing to 225% with effect from 1 April 2012, now that State Aid approval has been granted. This increased rate of relief also applies to pre trading expenditure. In order to pay for this increase, vaccine research relief is being withdrawn for SMEs, and the payable credit is also being reduced to 11% - the former is unlikely to hurt, but the latter will.
Good news for start ups is that the rule limiting the amount of payable R&D relief to a company’s PAYE/NIC liability will be removed for accounting periods ending on or after 1 April 2012, as previously heralded at this year’s Budget. This is particularly important to start ups which may have a relatively small number of employees.
R&D relief is subject to the requirement that the claimant is a going concern. The Finance Bill clarifies that any company which is in administration or liquidation in the UK (or the equivalent elsewhere) will not be a going concern.
SMEs and large companies
The requirement for minimum expenditure of £10,000 a year will be removed for accounting periods ending on or after 1 April 2012.
There is also a change to the definition of ‘externally provided worker’, so that the requirements to be met in order to include the costs of temporary workers in a claim will be relaxed from 1 April 2012.
These changes are additional to last week’s news at the Autumn Statement that, for larger company, R&D claims that the relief will be changing to an ‘above the line’ credit, affording the relief more prominence in financial statements. The intention is to give a further boost to R&D in the UK.
For more information contact Mike Hodges or Neil Mitchell .
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