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April 2011
R&D Brings Tax Benefits
Thousands of companies are benefiting from research and development (R&D) tax credits, according to new figures from HM Revenue & Customs (HMRC).
The figures, released in March, show that since the tax credits were introduced in 2000, 51,060 claims have been made, up to the end of the financial year 2008-09.
In 2008-09 alone, there were 8,540 claims – the highest annual figure since the R&D scheme began – receiving £980 million in tax credits. The total paid out in tax credits since 2000 was nearly £5 billion.
R&D tax credits are available, broadly speaking, when a research project seeks to achieve an advance in science or technology. Certain costs involved in the R&D may qualify for the tax credits, including expenditure on R&D staff, materials used in the R&D.
Companies spending at least £10,000 in their accounting year on qualifying R&D are entitled to claim a deduction when calculating their taxable profits of 150 per cent before, and 175 per cent on or after, 1 August 2008. For larger companies, the equivalent deductions are 125 per cent and 130 per cent.
Changes introduced in the 23 March Budget mean that the tax relief will become even more attractive to small companies, with the rates rising to 200 per cent in April 2011 and to 225 per cent from April 2012.
