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| Enhanced tax relief for SMEs |
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Caring Times, February 2010
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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.
'Previously, it was necessary that the company had a vested interest in the IP, but now that is no longer necessary. This will prove valuable for those companies looking to bolster balance sheets and enhance cash reserves within the business.'
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