R&D tax credit increased for small business

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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...

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Combined with the AIA......

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.

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Great news for loss-making businesses
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.

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By pbolton
02nd Apr 2015 00:26

Clarification

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?

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