Enhanced tax relief for SMEs
A tax partner at Deloitte, the professional services company, has explained some possible benefits for research and development in Alistair Darling’s Pre-Budget Report.
David Norton, a tax partner at Deloitte, said: ‘It was interesting to see that the Chancellor has enhanced the tax relief on research and development (R&D) for Small to Medium Enterprises (SMEs), which specifically targets companies with less than 500 employees and an annual turnover of up to EUR100 million (around �89m) and balance sheet total of up to EUR86 million (�76m).
‘From now on, those companies will be able to claim the enhanced tax relief for R&D expenditure even where they do not own the intellectual property (IP) that derives from it. ‘The relief is a tax deduction equivalent to 175% of the R&D expenditure but it can alternatively be traded in for a cash refund, which is capped at the amount of PAYE and NI due on the payments to the company’s workforce.