CIOT welcomes (some) changes to R&D tax relief

The Chartered Institute of Taxation (CIOT) has welcomed the announcement by the Chancellor that the rates of R&D tax relief will increase from April 2015, and that a new advance assurance scheme will be introduced for companies making their first claim.

David O’Keeffe, chairman of the CIOT’s working group on R&D tax relief, commented:

“From April next year companies which engage in R&D will benefit from modest increases in the rate of tax relief. The rate of the above the line tax credit, which was introduced in 2013 to encourage large companies to engage in R&D, is to increase from 10% to 11%, and the rate of the additional deduction for small and medium-sized companies will increase from 125% to 130%.

“Likely to be of more significance is the announcement that the Government will allow small companies making their first claim to seek advance assurance that they qualify for relief. The rules for determining whether or not R&D has taken place are complicated and deter many companies from making a claim. The introduction of this new service, alongside new guidance and the promise of a consultation on the issues faced by smaller businesses, should make it a lot easier for companies to claim R&D tax relief.

“However, it’s not all good news as the Government has also announced plans to restrict relief for the costs of materials incorporated in products that are sold. It will be interesting to see just what the Government has in mind here, and why.”

Notes for editors

The Chartered Institute of Taxation

The Chartered Institute of Taxation (CIOT) is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries.  The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 17,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.