On 9 December 2009, Alistair Darling, the UK Chancellor of the Exchequer announced in his Pre-budget report that legislation will be introduced to remove the ownership of intellectual property (“IP”) requirement for small and medium-sized companies (“SME”) in their R&D tax relief claims.
SMEs will benefit from this change as of the accounting period ending on or after 9 December 2009. This change will have a positive impact on many of Leyton’s UK clients allowing them to file claims on projects where IP ownership has in the past been an issue.
Currently, SMEs are able to claim up to 175% of any allowable expenditure against their corporation tax bill. Where the company is loss making, relief can be obtained either as an additional tax loss or a cash refund where conditions are met. One of the conditions that caused most confusion was the ownership of the IP arising from R&D activities undertaken by an SME.
The benefits of this change for SMEs include:
This change, along with the deferral of increased corporation tax rate for SMEs and a potential introduction of a 10% tax rate on UK patents, will potentially not only increase competition in the UK but also the country’s overall competitiveness in the world’s post-recession economy.
Call us on 020 7043 2300 to find out how this change may affect your business and investigate whether we can be of any help.