Tax relief for relevant Research & Development (R&D) expenditure has applied since 1 April 2000 for companies that are small and medium sized entities (SMEs), and since 1 April 2002 for large companies.
Special provisions for SMEs carrying on certain vaccine R&D were also introduced on 1 April 2002. Various refinements to the tax relief rules have been made in successive Finance Acts.
The Government continues to consult with business and the professional accountancy firms on ways to improve the R&D regime, as part of its plan to make the UK the most competitive tax regime in the G20 to start up, finance and grow a business. Some of the proposals have already been introduced in the Finance Act 2011 and further changes to the rules are anticipated next year, which should increase the availability of tax relief for SMEs and provide further cash flow savings. From April 2012, subject to State Aid approval, the proposed changes include:
Percentage of qualifying R&D expenditure incurred by SMEs increased from 200% to 225%
Removal of the £10k minimum annual expenditure cap
Removal of the PAYE/NIC cap for computing refundable credit
To find out more about R&D tax relief please download Baker Tilly’s Research Development Brochure below or alternatively contact Colin Smyth on +44 (0) 161 830 4105 or Graham Bond on +44 (0) 161 830 4021.