EU OKs R&D relief scheme changes for small firms

Date: 31st July 2008

Accountants have suggested that small businesses could benefit from the EU's approval of the UK's Research and Development Tax Relief scheme.

Deloitte explained that the improvements to the scheme are set to come into force later this week (August 1st) and will increase the number of businesses that qualify for relief.

What's more, firms will be able to claim a larger percentage of the eligible expenditure for amounts incurred on research and development as a result of the changes.

"It has taken longer than expected to reach this point, but now that approval of the improvements to the scheme have occurred, they will enable companies to proceed with greater certainty over the benefits they can expect as a result of investing in R&D," David Cobb, global head of R&D tax at Deloitte, explained.

"With the improvements expected to be implemented on August 1st, those companies which have an accounting period straddling that date will need to think about splitting their costs accordingly to ensure that they claim the correct rate of relief."

According to HM Revenue & Customs, the aim of the Research and Development Tax Relief scheme is to "encourage greater R&D spending in order to promote investment in innovation".

It added that R&D tax credits can either reduce a company’s tax bill or provide a cash sum for some small businesses.