New HMRC Guidance Notes for R&D Tax Credits
RIFT R&D welcome yet another increase in the tax credit, and are encouraged that the government is still actively supporting innovative UK small businesses.
The Government has released more detail on the changes to the Research & Development Tax Credits scheme, it announced in the Autumn Statement 2014 on 3rd December 2014. Both of these measures apply to expenditure incurred on or after 1 April 2015.
RIFT Research and Development welcome yet another increase in the tax credit, and are encouraged that the Government is actively supporting innovative Small Businesses in the UK.
The updates to the SME scheme are:
• RESEARCH AND DEVELOPMENT TAX CREDITS: INCREASED RATE RELIEF
Increase in the rate of expenditure credit from 225% to 230%
• RESEARCH AND DEVELOPMENT TAX CREDITS: CLAIMS FOR PROTOTYPES
Clarifies the treatment of expenditure on prototypes
Increased rate relief
R&D tax credits are a key element in the government’s commitment to an internationally competitive tax system, and in its objective for strong and sustainable private sector-led growth. In particular it rewards SMEs who are self-funding innovation and development work.
The scheme was originally introduced in the Finance Act 2000. The Government announced in the Budget 2011 that it would increases the rate of the SME relief from 175 to 200 per cent from April 2011, then from 200 per cent to 225 per cent from April 2012. This is a further increase from 1 April 2015 to 230 per cent.
If you need further help or clarification on what the increase in the relief means for your small business, email the RIFT R&D Team or call them on 01233 653002.
Claims for prototypes
This measure falls under the consumable items guidance. In general it applies to materials used in the production of prototypes. The revised definition makes it clear that the cost of materials incorporated in the development of a prototype, which is subsequently sold will now not be eligible for the relief.
If you need further help or clarification on the definition of consumable items in relation to the R&D tax credit scheme, email the RIFT R&D Team or call them on 01233 653002.
Get credit for your business innovation with research and development tax credits claim assistance from RIFT. Find out more about types of HMRC R&D tax credits, deep dive into the world of business innovation with our insights, or contact RIFT R&D today to find out how we can maximise your benefits.