Budget Announcements 28.10.18

From Maria Kitt

Whilst the Budget announcements provided some encouragement to the SME economy, sadly the RD sector received a shock announcement throwing us back to the pre 2007 gloom where tax credits are pegged to a tax ‘cover’ of PAYE / NIC contributions. The excuse is that HMRC have discovered fraudulent claims and are ‘preventing abuse’: when was the engagement of subcontractors rather than employees on RD activity an abuse?
We will be adding to the consultations in due course, to make the point of view that post Brexit, it is very important for RD companies to be able to hire where and whom they wish, rather than tying into fixed employment contracts.

‘2.17. Preventing abuse of the Research and Development(R&D) tax relief for small and medium- sized enterprises (SME) As announced at Budget 2018, Finance Bill 2019-20 will introduce a limit on the amount of payable tax credit that can be claimed by a company under the R&D SME tax relief. The limit will be set at three times the company’s total PAYE and National Insurance contribution (NICs) payment for the period. The change will have effect for accounting periods beginning on or after 1 April 2020. Any loss that a company cannot surrender for a payable credit can be carried forward and used against future profits. We will consult on this change.’