Accounting Web: Proposed R&D cap threshold offers ray of hope to startups

Date: June 3, 2019

Introduced in Budget 2018, the government’s plans to cap R&D tax credits raised fears that legitimate claims by startups and small business would be denied. But the proposal’s recently concluded consultation period offers a ray of hope.

Back in the more innocent days of 2018, in what could be Philip Hammond’s last Budget, the government announced a PAYE restriction on those making R&D tax credit claims.

The tax credit has become increasingly popular. R&D tax credits provided almost £3.5bn of relief in 2016/17, according to government figures. That dwarves the £350m claimed in 2010, for example.

But with this popularity has come a concomitant abuse of the regime, the government argued. HMRC identified £300m in frauds claimed by “artificial corporate structures”. To deter abuse, the government proposed a cap.

From April 2020, the amount that a loss-making company can receive in R&D tax credits will be capped at three times its total Pay As You Earn (PAYE) and National Insurance contributions (NICs) liability.

Read more here

Live chat
Password Reset
Please enter your e-mail address. You will receive a new password via e-mail.