Pictured above: Mark Evans
A Wolverhampton based tax specialist has praised George Osborne
for increasing the rate of relief for tax paid on research and
development.
Mark Evans, from R&D Tax and Grants Ltd, has praised the
chancellor's decision to increase the SME scheme's rate of relief
from 175 per cent to 200 per cent from this April and 225 per cent
from April 2012, subject to European Union state aid approval. The
scheme, instigated by the EU, encourages SMEs to develop their
products and processes and then to claim back corporation tax paid
on any research and development (R and D) carried out.
From April 2012, it is proposed that the R & D scheme should
be further improved, including the removal of the Pay As You Earn
(PAYE) and NIC cap on the amount of tax credit that can be claimed,
removing the minimum expenditure rules and amending relief through
the large company scheme for subcontracted activity which forms
part of a wider R and D project.
"George Osborne has taken the recommendation of the Dyson Report
from early 2010 and gone even further", says Mark Evans. "The great
news for UK manufacturing is that tax relief on money spent on
research and development is here for the foreseeable future, at
least until March 2013. In percentage terms, the relief has
increased 14 per cent now and a further 12.5 per cent in 2012."
R&D Tax and Grants achieve an average saving of
£60,000 per client at present. Even after taking into account
the reduction in corporation tax rates, this will now increase to
£65,500 in the next tax year and £73,500 in
2012.
"The proposed removal of the PAYE/NIC cap on the amount of
payable credit is also great news for high tech start-up businesses
that have made substantial losses due to being in the R and D stage
but have not yet taken on many employees or paid themselves high
salaries. In the past, the cap has restricted the amount of help
obtained by these businesses at a crucial phase in their
growth."
The good news for the region's manufacturers follows other
boosts including the granting of two Enterprise Zones for the Black
Country and Birmingham and the region's manufacturers reporting
sector growth in the last quarter. "If the Chancellor really has a
vision of seeing "Britain held aloft by makers on the march", as he
said in his closing speech at the Budget, then the Government need
to commit to assisting the sector and this increase in R&D tax
relief can only help."
The Government will publish a response to the consultation in
May 2011, which will include a consultation on the detail of
proposed changes.