NEWS 08 July 2015

Alma CG responds to Summer Budget 2015

Managing Director Martin Hook outlines the implications of the Chancellor's Budget announcement.

Investment in HMRC

“The Chancellor has pledged an investment of £750m to target tax evasion.  This is a significant amount of money to solely tackle tax evasion.  At a time where all areas of HMRC are lacking sufficient funding we would prefer to see resources being made available to improve other frontline HMRC services.  For instance, some of our clients are currently experiencing much longer Research and Development (R&D) tax claim processing due to HMRC restructuring and R&D unit closures.”

“These changes continue the Government’s tough line on tax planning - now evasion, avoidance and planning are all lumped together as undesirable.  This will maintain the situation where genuine tax incentives, such as R&D tax credits, become more and more important to companies wanting to plan their tax affairs efficiently.”

R&D Tax Relief

“The full Budget documentation specifies that an anomaly in the Research & Development Expenditure Credit legislation will be corrected, meaning that universities and charities will no longer be able to claim.  Whilst it's disappointing these institutions will no longer be able to claim on expenditure from 1 August 2015, as stated by HMRC, this was never the policy’s original intention and clarification of this grey area is welcome.”

Patent Box

“We had been expecting clarification on the future of the Patent Box scheme and were disappointed with its omission from the Budget.  However, we welcome the retention of the generous R&D tax relief schemes available for UK businesses as it supports continued investment in innovation.”

Annual Investment Allowance

“Whilst we knew that the £500k Annual Investment Allowance would only ever be short-term, we had hoped it might return to the previous rate of £250k.  However, £200k is still a far preferable rate to the previously impending £25k.  The continuity promised by a permanent rate set at £200k will allow businesses to plan their long-term R&D strategies and investment.”

Corporation Tax

“The announcement of a reduction in corporation tax to 19% in 2017 and 18% in 2020 is good news for British business, meaning greater investment and economic growth.  However, from the perspective of R&D tax relief it will reduce the amount of benefit claimable for tax paying SMEs and slightly increases the benefit available for Large Companies through the R&D Expenditure Credit Scheme from 2017 onwards.  The benefit loss making businesses of all sizes receive will not be impacted by this change.”