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News Release from: Editorial Articles: Miscellaneous submissions | Subject: Budget changes
Edited by the Processingtalk Editorial
Team on 14 March 2008
R+D set to boost with improved tax
incentives
The budget gives greater tax incentives to UK R+D - a move set to help bring UK innovation back to this country from low labour-rate countries such as India and China
In an announcement clearly favouring SMEs, Darling advises that R+D tax credit enhancement is set to increase from 150% to 175% for SMEs, and from 125% to 130% for large companies This means a profit-making SME spending GBP100,000 on qualifying R+D will now be eligible for a tax saving of GBP22,500 when the changes come into effect on April 1st
This article was originally published on Processingtalk on 21 Feb 2005 at 8.00am (UK)
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Prior to the Budget, the saving would have been GBP15,000.
Larger companies spending the same amount will see a GBP1,500 increase on an average tax saving of GBP7,500.
To make the incentives more widely available, the Government is also set to change the definition of an SME after the Finance Bill 2008 in order to include more businesses under the SME umbrella.
The Treasury has had to gain approval from the European Commission to change the definition of an SME because it affects state rules.
Alma Consulting Group Director David Marshall comments: "This is certainly a step in the right direction towards both making the UK a hub of high tech research and development and stemming the flow of manufacturing companies chasing lower labour rates across the globe - but there's still a long way to go in order to bring it into line with existing schemes in other countries.
While the improvements announced today point to a Government thirst for UK innovation, there are key issues that the Chancellor has failed to address; software development for gaming consoles is still excluded from R+D tax breaks - an incredible omission when taking into consideration the size and potential of this still-burgeoning market.
The Government must acknowledge this industry as a key innovator, and introduce tax relief on patent registration, if the UK is to offer a globally competitive R+D tax scheme to the business community".
The Government joined the OECD (Organisation for Economic Cooperation and Development) in 2000 in order to secure means for eligible companies to offset a proportion of their R+D expenditure through R+D tax credits.
The scheme itself aims to encourage UK innovations and achieve 2.5% GDP investment in R+D by 2014.
See Alma Consulting on www.almacg.com.
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