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R&D Tax Relief – The Common Misconceptions!
You don’t have to be wearing a white lab coat to be able to claim R&D tax relief! (pixabay.com)
Whilst Research & Development (R&D) tax relief is now an adult, given that is has been in the UK tax legislation for over 18 years, there are many companies still not claiming the relief they are entitled to or are only scratching the surface in their claims.
Most companies don’t claim because they are simply not aware. HMRC estimate that around 200,000 companies in the UK could be claiming R&D tax relief but only around 40,000 actually do.
As a reminder – to an SME a claim uplifts qualifying costs by an additional 130%, substantially reducing a tax liability or, in the case of losses, an increased loss that can be surrendered in return for 14.5% cashback from HMRC, whether or not that company has paid any tax in the past! A claim can be submitted up to two years after the end of the accounting period.
What are the three main misconceptions or barriers to make a claim? (more…)
Patent Box Consultation: closing date for comments 4 December 2015
As previously reported on IPcopy, HM Treasury and HM Revenue and Customs are currently running a consultation on proposed changes to the UK Patent Box scheme. The consultation runs until this Friday (4 December 2015) and the consultation document, which includes some background on the existing Patent Box scheme, can be found here.
The main change proposed in the consultation is the use of R&D expenditure as a proxy for “substantial activities”. A so called “nexus fraction” will then be calculated in which a company’s own R&D expenditure on the IP in question plus any subcontracted R&D expenditure to an unrelated party (these figures together forming the “qualifying expenditure”) will be divided by the qualifying expenditure plus any R&D subcontracted to a related party plus acquisition costs.
Companies who have developed their own IP are likely to have a nexus fraction of close to “1” and so will essentially be unaffected by the revised rules. However, company’s which have acquired IP will see nexus fractions of <1 which will therefore reduce the income which qualifies for the new Patent Box.
Although the main change is the use of R&D expenditure as a proxy for substantial activities it is noted that the proposed changes will also have some other fairly noticeable effects, namely: (more…)
The Patent Box Reloaded – Welcome to the Nexus
HM Treasury and HM Revenue and Customs have jointly launched a consultation on proposed changes to the UK Patent Box scheme. The changes are being proposed in order to meet proposals developed by the Organisation for Economic Co-operation and Development (OECD) to harmonise preferential tax regimes that operate in G20 states.
The consultation runs until 4 December 2015 and sets out the Government’s preferred approach to the new international framework set out by the OECD. The consultation will affect UK business that hold/exploit patents.
Due to some slightly compressed deadlines arising from the OECD, the Government’s plan is to publish proposed legislation in December 2015 and then a response to the consultation in spring next year. The current patent box rules will apparently be modified by legislation in the 2016 Finance Bill.
The consultation document includes some background on the existing Patent Box scheme. The Patent Box, which of course is a tax initiative that seeks to make the UK competitive for high-tech companies, has apparently seen 639 companies taking part so far and receiving benefits that total £335 million. (more…)
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