Although the UK has a low corporation tax rate of 19%, it is a country with a strong history of scientific and technological innovation. The Government recognises the important contribution that innovation and the exploitation of associated resources can make to economic growth and therefore offer reliefs to UK based businesses to support this. As a result, businesses receive better tax credits or even money back.
R&D tax reliefs provides an attractive enhancement of qualifying R&D expenditure and is particularly beneficial for early stage and loss-making companies, as a payable tax credit can be recovered from UK tax authorities, which can assist with cashflow at such a critical time.
A further, often overlooked, area is the fact that whilst the business has to be based in the UK to receive the relief, the actual R&D work can be undertaken overseas at a slightly reduced benefit as long as the work benefits the UK Company.
For international tech businesses coming into the UK, it is important to seek early advice on R&D tax reliefs and having an effective global tax strategy.
Martin Hamilton from Menzies LLP commenting on the global reach of R&D tax reliefs:“R&D is becoming more global with other countries such as Netherlands offering similar schemes to try and attract international business. In fact many small European nations also offer their own variant of R&D tax relief and IBS is best placed to assist here to ensure opportunities are not lost.”