R&D tax credit increased for small business | AccountingWEB
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R&D tax credit increased for small business

Small businesses and start-ups that do research and development (R&D) will receive more cash from HMRC, Chancellor George Osborne announced in the Budget.

From 1 April 2014, the tax credit for loss-making small and medium-sized businesses will be increased from 11% to 14.5%. The tax credit - paid in cash - is to encourage businesses to invest and innovate.

Around 10,000 small businesses claim R&D tax relief each year, HMRC said.

​Jumpstart, which advises businesses on claiming R&D tax credit, said the more generous tax breaks create the "right climate for enterprise and innovation."

The R&D tax rules define an SME as a company or organisation with fewer than 500 employees and either an annual turnover not exceeding £83m, or a balance sheet not exceeding £72m.


Combined with the AIA......

Simon@CoodenCon... | | Permalink

increase to £500k, there is the real possibility that the increase in the R&D Tax Credit rate to 14.5% could actually be of significant benefit to more than just loss-making, start-ups. Significant entities could turn their taxable profit into a loss if they have acquired eligible plant and machinery doing the year and were performing R&D. Effectively, you could be claiming up to 33% of your R&D costs as a tax credit.

R_DTaxCreditsBristol's picture

Great news for loss-making businesses

R_DTaxCreditsBristol | | Permalink

As this article doesn't really make clear, the scale of the benefit for a loss making business has increased considerably. A loss making business investing £100k in eligible R&D activity can now claim up to £32,625 as a cash credit, an increase of 16%. A profitable company can claim up to around 25% back under the scheme.


pbolton | | Permalink

Could someone please clarify - is it 14.5% of the loss or 14.5% of the enhanced R&D expenditure (or maybe even the lower of the 2!?).  e.g. profit £50k, turned into a loss of £150k after R&D of £200k.  Is the 14.5% against the £150k or the £200k?