Will R&D Tax Credits Last?
Over recent months following the UK’s planned departure from the EU the most reoccurring question is ’how long do you think R&D will last?’
During the Budget on 8 March 2017, Mr Hammond confirmed.
- The government’s commitment to R&D Tax Relief stating plans are to be put into action reducing the administration burden of claiming R&D Tax Relief under the RDEC scheme.
Whilst this is a positive step for those companies claiming under the RDEC scheme, this will relate primarily to large companies. If simplification is to assist UK innovators as a whole simplification must also be applied to the SME regime, assisting those smaller owner managed businesses undertaking high risk activities in innovation.
- The R&D process has been reviewed and is considered to be competitive.
This leads to the conclusion that the relief will maintain its formulation and financial benefit in much the same guise as it has in recent years, with SME and Large companies both benefiting from a cash incentive. However, as corporation tax rates are due to fall in coming years the effective benefit of R&D tax relief claims will for many profitable companies also fall. To remain competitive and inventivise companies to trade from the UK perhaps a change in the rate of relief in coming years will be necessary.
- Action will be taken to improve awareness of R&D tax relief under the SME regime.
Whilst raising awareness of R&D is needed in the SME arena, the statements made do appear to support big businesses rather than the SME’s and startups.
Whilst these statements are positive for the future of companies who qualify to claim R&D tax relief, there is no current understanding of what measures the government plans to put into place to ensure innovative UK companies are taking advantage of the relief.
The R&D regime is designed to reward innovation of all UK companies and also attract global business to the UK. If this objective is to continue to be achieved any changes to the R&D regime must apply across the board to SME’s and Large companies and also take into account planned corporation tax changes which fundamentally effect the financial benefit of making a claim.
Claiming for R&D Tax Credits
To claim companies will still need to meet the legislative requirements both with regard to the projects and claimable costs, this is where specialist assistance is key to maximize your claim. Here at R&D tax we help businesses see if their eligible to claim and help you through the legislative requirements.
