Wed 23 Nov 2016
The Government has today confirmed its intention to support innovation within the UK, having identified this area as a key driver for economic growth, with additional funding of £2 billion a year being made available and tax reliefs to be reviewed.
The availability of additional funding and grants will be welcome news to innovative businesses and the new funds will surely create a flurry of activity when the application process and criteria are announced.
The UK already has some generous tax reliefs in relation to innovation with R&D tax and Patent Box tax regimes.
Although specific details regarding both of these reliefs were not announced today, there was mention of expanding the patent box regime to allow joint developers of the patented IP to potentially qualify for the regime and also a review of the ‘above the line’ R&D tax credit to make the UK even more competitive place to undertake R&D.
The ‘above the line’ R&D tax credit currently results in a credit from HMRC equal to 11% of qualifying R&D spend. This credit is then subject to tax and, with a current CT rate of 20%, would result in a net 8.8% of qualifying R&D expenditure funded by HMRC.
It remains to be seen how the additional funding and grants will interact with the ‘above the line’ R&D tax credit and to what extent the ‘above the line’ credit will be improved, however, with these announcements and the confirmation that it will stand by the previously announced reductions in CT rates, the Government is showing an intent to make the UK an attractive place for innovative businesses.
For further information please contact Richard Dillea (Richard.Dillea@mazars.co.uk)
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