R&D Tax Credit Rate Increased

by | Apr 2, 2014

 

Companies that are small and medium sized enterprises (SMEs) carrying out qualifying research and development can currently claim a corporation tax deduction of 225% of their qualifying spend.

This means that £100,000 spend would result in a £225,000 reduction in taxable profits, potentially saving £45,000 corporation tax (at 20%).

However, if the company is loss making this benefit may not be received until future years when profits are made.  In order to improve the cash flow of these loss- making SMEs, the tax rules allow the company to surrender the loss attributable to the enhanced R&D spend for a tax refund. This has been increased from 11% to 14.5% with effect from 1 April 2014. So the £225,000 (based on £100,000 spend) would result in a refund of £32,625.

Contact us if you would like to discuss whether your company could qualify for R&D tax relief.

Mark Rubinson

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