Mixed response to R&D consultation
PwC have offered a mixed response to the Government’s recently published consultation document detailing ideas for the new ‘above the line’ R&D credit.
The new credit system will be set against the cost of R&D rather than reducing the tax charge, and will also be payable to companies with losses. Under the current regime, companies paying tax save cash at 7.8% of the amount spent on R&D, but those with losses get nothing.
Lynsey Fothergill, senior manager at PwC in the North East specialises in R&D and Patent Box. She commented: “Getting the credit against R&D costs is really important to making the incentive effective.
“It makes UK R&D more competitive on cost and should enable budget holders to factor it into investment appraisals.”
This announcement will be welcomed by large businesses in the automotive sector, who have made repeated calls for change. If is hoped the the new R&D credit, patent box incentive and the reduced headline rate of tax will make the UK a more attractive place for innovation.
Nonetheless, Lynsey is concerned that the new system will detrimentally affect companies with losses.
She continued: “It is disappointing that efforts to minimise the cost of funding the R&D credit have resulted in designs to discount the amount paid to companies with losses.
“The proposals – which suggest the payable credit should be perhaps 6% rather than 7.8% - are complex and may jeopardise getting it above the line”.
This was posted in Bdaily's Members' News section by Ruth Mitchell .
Enjoy the read? Get Bdaily delivered.
Sign up to receive our popular morning National email for free.