R&D Tax relief and more tax reliefs for investment in innovation

Start your tax relief claim now – Call 01606 369000

The R&D tax relief is valuable for small companies as it saves tax and can result in refunds from HMRC to allow further investment in new products.

However, R&D tax relief is only available on time and costs up to when the product is completed and ready for sale.

“Once the product is ready for sale, we would advise that the company takes out a patent to both protect the product from the competition and to take advantage of further tax relief for sales of patented products” says Tim Lwin, Tax Partner at HW RandDCo.

HMRC introduced a tax relief called “Patent Box” where the profits from the sale of products under a recognised patent or licence are subject to tax at 10% rather than 19%. This effectively halves the company’s tax bill leaving more post-tax cash for re-investment.

Some companies may not be claiming this 10% tax rate but it is not too late. It should be possible to go back at least 2 years and claim refunds of overpaid corporation tax.

The increase in the annual investment allowance to £1m to give tax relief on the expenditure of capital equipment will provide an immediate tax saving for small companies. However, large R&D companies exceed this regularly and the tax relief on the excess is spread over 10 years.

If more than £1m is being spent on say laboratories and to facilitate R&D, the company can claim immediate tax relief on all the capital expenditure with no limit on the spending under the tax relief called “Research and Development Capital Allowances”.

This should be welcome news for Bruntwood SciTech who announced a £10m investment for the development of more than 50,000 sq ft of laboratory space at Alderley Park’s Mereside life science campus in Cheshire.

The Government is committed to the UK being a centre of innovation excellence with valuable tax reliefs throughout and peripheral to the development cycle.

If any of these reliefs have been missed, it should still be possible to claim a tax refund if you are still within 2 years of your accounting period end date, so please speak to us to find out how your company can claim the tax savings, email: TheRandDCo@howardworth.co.uk or call: 01606 369000