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R&D Credits and Patent Box Seminar


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Maximise Tax Savings from R&D Credit Relief and Patent Box


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R&D Credit Relief and Patent Box provide incentives for UK companies to improve their products, services and processes

Patent Box and the above-the-line R&D tax credit introduced in April are designed to incentivise UK companies to invest in innovation. The changes will allow businesses to cut their Corporation Tax liability and in some situations receive a cash payment from HMRC.

The new Patent Box regime will enable companies to pay a reduced rate of Corporation Tax on profits attributed to patented inventions. The main rate of Corporation Tax is currently 23% and by April 2017 an element of the profits attributed to patented inventions will be taxed at just 10%.

The new above-the-line R&D tax credit will apply to large companies which will be able to claim a tax credit equivalent to 10% of their research and development spend instead of using the existing R&D tax relief super-deduction. In certain circumstances this may be refunded to the company as a repayable tax credit.

The existing R&D tax credit scheme continues to allow small and medium-sized companies to claim tax relief of 225% on the costs that are attributable to the Examples of patent box claimsimprovement in a product, service or process. It can apply to companies that are loss making as well as profit making, such companies can claim back the total tax relief in the form of cash. For example, if these costs are properly measured as £100,000 then with the super-deduction the company’s tax can be reduced by an additional £28,750 or for a loss making company, the repayable tax credit would be £24,750.

Mary Tierney is a tax specialist and she explains that it is unfortunate that the Government has chosen to use the term ‘Research and Development (R&D)’ in describing the schemes because it leads many to think that they have to be heavily engaged in traditional R&D before they can benefit from the schemes. She has helped many companies successfully navigate their way through the R&D tax credit scheme and she is now advising clients on how they can also maximise their tax savings via the Patent Box scheme.  Mary specialises in making these claims on behalf of companies and she has presented me with many examples of companies that wrongly presume that they are not eligible and she has then gone to claim back amounts in excess of £100,000 from HMRC.

Mary has pointed out to me that an attractive feature of the schemes is their flexibility, meaning that no matter where you are in your product cycle there is an incentive for your company - you can continue to benefit from R&D tax credits and now you can also make further savings using Patent Box. The tricks are:

  1. Knowing how to account for the income and expenses related to the improvement in a product, service or process; and
  2. Finding your way around the HMRC guidance on the schemes and being able to choose which are the best options for your company.

Mary is designing a three-hour seminar which will help you maximise your company’s tax savings from the R+D Credit Relief and Patent Box schemes.  The first presentation on 15th October in London is full and we have arranged further presentations during November in London, Birmingham and Manchester.

For details of the seminar please go to this web page.

Stephen Smith
Managing Director
UK Training (Worldwide) Limited

 


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