2014: Increase Research & Development (R&D) Tax Reliefs

Key points from the Chancellor's Autumn Statement 2014:

With effect from 1 April 2015, the rate of tax relief that SMEs can claim on qualifying R&D expenditure will increase from 225% to 230%.  This typically means that for every £100,000 an SME spends on qualifying R&D projects, they will save an additional £1,000 in corporation tax under the newly increased rates of relief.

Larger companies will see the credit that they will be able to claim on their R&D activities increase from 10% to 11%.

These changes, whilst relatively modest, provide further cash incentives to innovative companies to continue to invest in innovation and are therefore to be welcomed.

One potential tightening of the rules was announced through a restriction of relief for the cost of materials incorporated in products that are sold.  Draft legislation is expected soon that will provide further clarification of these changes.

Overall, despite the slight restriction announced, it is good to see the Government continuing to provide tax incentives for innovative companies.  The R&D tax relief regime has been very successful in attracting innovative companies to the UK and enabling home-grown ideas to be developed here in the UK.

For more information or to discuss anything in more detail, please contact Scott Burkinshaw