Tag Archives: tax relief

Research and Development (R&D) Tax Reliefs

shutterstock_84635077The recent budget saw the Chancellor raise the amount of R&D tax reliefs for small and medium sized companies (i.e. companies with fewer than 500 employees) from 225% to 230% from 1 April 2015.

This means a small or medium sized company incurring £100,000 worth of qualifying R&D expenditure would receive tax relief as normal through their accounts for the £100,000 spent together with an additional £130,000 (£100,000 x 130%) tax deduction via their company tax return.

If the company is loss making, the loss can be surrendered for a cash repayment of up to 33% of the qualifying R&D expenditure which is particularly helpful for the cash flow of a fledgling business.

What projects qualify for R&D?

A common misconception is that only larger companies with specialist R&D departments making groundbreaking leaps in the advancement of science or technology will qualify.

However, at PM+M we have made numerous R&D claims on behalf of our clients, of varying sizes and across a number of business sectors.  The R&D projects we see tend to fall into the following areas:

• The integration of two or more existing components/systems to create new assemblies/systems etc.

• The replacement or substitution of one material for another i.e. replacing metal with a more durable substance.

• Develop a system, process, material or device to be: faster, lighter, stronger, cheaper or more accurate.

Basically, if you are doing something that your competitors are not doing and would be impressed by, there is a reasonable chance that it could qualify as an R&D activity.

What costs qualify?

The main cost is usually the salaries of people engaged in the R&D activity, including employer’s national insurance and any pension contributions. Other allowable costs typically include consumables, sub-contractors costs (with some restrictions), software and some utility costs if these can be directly related to the project.

For more information on R&D, please click the button below for a copy of our helpsheet. Alternatively, you can contact the PM+M tax team on 01254 679131 or by email tax@pmm.co.uk.

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Tax changes for commercial property purchases from April 2014 – don’t lose out on the tax relief

When buying a commercial property it is often possible to claim significant tax relief on the plant and fixtures within the building using capital allowances.

The rules on such claims change significantly on 1 April 2014 and action in advance of property purchase will be needed in order to retain any possibility of making claims.

The changes are important and should be noted by all parties involved in commercial property transactions.

The relevant legislation for the above was introduced as part of the Finance Act 2012 and we have been in a 2 year transitional period which ends on 31 March 2014.

In broad terms, capital allowances will not be claimable by a buyer acquiring a second hand property after 31 March 2014 where the allowances have not been pooled by a seller and included in a Fixed Value Requirement (s198 Election) or a Disposal Value Statement.  Advice should therefore be taken before the purchase takes place.

Failing to take account of the changes means property owners may lose out on considerable tax relief or may even suffer a reduction in property value for onward sale.

As regards historic acquisitions, despite what some press releases would suggest, there are no additional restrictions on retrospective claims and these can be made at any point prior to disposal.  It is therefore well worth checking that the maximum tax relief has been claimed on previous commercial property purchases.  Clearly the sooner these claims are made, the sooner the cash flow benefit is obtained.  Our capital allowances specialist can provide a no obligation review of potential claims – contact us for details.

For expert advice on capital allowances matters please contact Jane Parry or Claire Astley on 01254 679131 or at jane.parry@pmm.co.uk / Claire.astley@pmm.co.uk.