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So we’re finally down to the shortlist of two in the race to become the next UK Prime Minister. Regardless of who triumphs when the 160,000 Conservative Party members cast their votes later in July, the winning candidate has his work cut out in finding a workable solution to Brexit. While the country remains divided, most people want the issue resolved one way or another so we can get on with more pressing challenges, not least delivering economic growth.

Assuming we do leave the EU, it will be vital that the new Prime Minister puts an increased focus on how to transform the UK into a world leader in business innovation. Existing measures, such as R&D tax relief and Patent Box, which incentivise companies to invest in innovation projects to make them world-leading are integral to this process.

Patent Box enables profits arising from qualifying patents to be taxed at a reduced rate of corporation tax of 10 per cent. It was introduced as a spur for increasing innovation by encouraging UK companies to protect and commercialise their intellectual property. R&D tax relief enables companies investing in product or service improvements to apply for significant tax breaks. A 2015 evaluation by HMRC suggested that for each £1 of tax foregone, businesses were spending between £1.53 and £2.35 on R&D activity. The most recent stats released by HMRC show the amount claimed in R&D tax relief in 2016-17 was £3.5bn with £1.8bn going to SMEs.

Article originally published on Scottish Financial News

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