UK's Angela Eagle Announces GBP80mn Boost For R And D Tax Credits

by Robin Pilgrim, LawAndTax-News.com, London

01 August 2008

Tax Credits to encourage small businesses to invest more in research and development will increase by GBP80mn a year from 1st August, bringing the total tax relief available to around GBP300m a year, Exchequer Secretary to the Treasury, Angela Eagle MP announced on Thursday.

The increased tax relief is designed to encourage more of the UK’s innovative small and medium companies to invest in developing new and improved products.

To enable companies to claim the additional tax relief, the rate available for qualifying small and medium-sized enterprises (SMEs) investing in R&D will increase from 150% to 175% of their investment.

The size of company that can qualify for tax relief will also increase, from 250 employees to up to 500 employees, with the associated limits on balance sheet value and turnover also doubling.

The increase aims to help SMEs to grow into large R&D firms by continuing to provide the benefit of a higher rate of relief up to these new, higher limits.

Ms Eagle observed on Thursday that:

"The R&D tax credit schemes are the Government’s most important policy in support of R&D investment by companies in the UK. By increasing the value of the SME scheme by a third, we are showing our continued commitment to helping innovative UK companies invest to grow.

She concluded: "Today’s announcement will build on more than GBP1bn worth of support already provided. The increase in the size at which a company can claim under the scheme will be a huge boost for the small R&D intensive companies that will be the large innovative companies of the future."

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