R&D tax scheme will boost large manufacturers

LARGE manufacturers in the North West are being urged to take a fresh look at research and development tax relief schemes as new favourable rules are on the horizon.

Business advisers PwC says tax changes planned for next April, could benefit companies who have investing in innovation and new products.

From April 2013, the Government is planning to introduce a new ‘above the line’ R&D tax credit that will be available to companies with more than 500 employees regardless of whether they are making a profit or loss.
The proposals are currently subject to a wider consultation and views from businesses are being sought by 29 June 2012.

PwC says it is good news that businesses will soon be able to claim a repayable tax credit to help balance the books even before their innovation goes into production.

Brian Clark, head of tax at PwC in the North West, said:  “Larger firms in the region are big spenders when it comes to R&D and they deserve to be able to take the credit for their investment.

“From April next year, it is proposed that even if they are making a loss they will be able to claim a repayable tax credit calculated by placing the sum invested in R&D above the line. For tax purposes, this means their R&D spend can increase the company’s profits before tax.
 
“For those investing large sums in R&D each year, the tax credit repaid to the business could be significant and this is likely to encourage some engineering teams to consider claiming R&D tax relief for the first time.”