Large companies get R&D boost

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Robert Lovell
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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.

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25th Mar 2013 16:44

SMEs and "Qualifying expenditure"

So no change to these rules then, it seems.

A small company that does its own R&D, and doesn't employ consultants, and furthermore pays its directors below NMW because they're busy doing the R&D - gets nothing. Anyone got an idea how you can get 'above the line' qualifying expenditure without actually having to pay your much needed cash to somebody else?

And if it's in a field (like software) which is not patentable, there's nothing doing there either, as it has no income drived from patents.

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