Research & Development Tax Credits

Accounting, Businesses, Corporation Tax l

R&D tax relief currently provides an enhanced deduction of 230% of qualifying R&D revenue costs. This is made up of:

  • 100% of the costs which would normally be deducted without R&D tax relief; and
    130% of those tax deductible costs.

This means that for every £100 of qualifying R&D costs, £230 is deducted from the company’s pro ts, or added to the company’s trading losses for tax purposes.

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Parking fines – a business expense?

Accounting, Businesses, Corporation Tax, Tax/VAT Cases l

parking ticketsThe rules relating to the tax treatment of parking fines have been clarified thanks to a recent first tier tax tribunal decision brought by G4S.

Though prohibited under HMRC rules, to date, many companies have treated their employees’ parking fines as a tax deductible expense. However the situation has now been confirmed with a clear precedent for HMRC to reject any future such claims.

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HMRC are removing a barrier to R&D tax credits

Businesses, Corporation Tax, Growth l

Einstein_laughingSince 2000, companies have been able to claim significant tax relief for undertaking qualifying R&D, however the uptake among smaller businesses has been and remains low. This can mean reduced corporation tax, or a cash payment from HMRC.

The main barrier to claiming is thought to be concern that the R&D undertaken doesn’t qualify, leaving the business with additional professional fees to pay for an unsuccessful claim.

To overcome this, from Autumn 2015 HMRC are introducing the ability for smaller businesses who have never claimed R&D tax credits to gain advanced assurance whether an R&D project would/does qualify, ahead of doing any calculations and making the claim. This should reduce the speculative risk of making a claim for these businesses.

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