The government has increased research and development (R&D) tax relief to help boost growth and innovation in the manufacturing and science sectors.
The Chancellor said in his Budget speech that R&D was central to Britain's economic future and confirmed he would raise the relief from 9.1% of R&D expenditure to 10% from 1 April.
Anne Fairpo said in her blog that while this doesn’t sound much of an increase, “it’s a large improvement on the 6% that the current large company relief would be worth when the 20% corporate tax rate comes into effect.”
Brian Williamson, managing director at Jumpstart told AccountingWEB: “It’s not an enormous benefit, it sounds a lot in percentage terms, but I think the whole principle behind the above the line credit is a sound one. For large companies making a loss this is a marginal improvement.”The “surprise” increase represents a real-terms benefit over the existing R&D tax relief.
According to HMRC’s TIIN, the 10% above the line (ATL) credit for large company R&D activity is designed to increase the visibility of large company R&D relief and provide greater cash-flow support to companies with no corporation tax liability.
It will also increase the financial value of relief and improve the competitiveness of the UK as a location for large company R&D investment, says HMRC.Budget 2013 coverage - sponsored by TaxCalc
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