Commenting on the increase in the rate of the Research and Development (R&D) payable tax credit for Small and Medium Sized Enterprises (SMEs) from 11% to 14.5%, announced today in the Budget, Carol Johnson, Tax Director in the Innovations Reliefs and Incentives Group at KPMG in the UK, said:
“Today’s announcement means that the amount of the payable R&D tax credit that a loss making business can claim increases by around a third from just over £24 to just over £32 for every £100 spent*. This is a very welcome boost to innovative start-up companies, many of which are loss-making as they establish themselves."
“The Government estimates that they will provide an additional £130m of extra funding per annum will by 2018/19. Currently around 800 science and technology companies benefit from this credit and we anticipate this will increase as a result of today’s measure.”
* For the tax calculation, every £100 of cash spend has an extra £125 added to it for the purposes of the tax computation and it is this total figure that the 11% and now 14.5% is applied to. Hence a spend of £100 is enhanced to £225 and at 11% the R&D credit is worth £24.75, increasing to £32.62 at 14.5%.
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Chancellor’s Budget 2014
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