Budget 2012: The R&D Tax Credits impact
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Budget 2012: The R&D Tax Credits impact

George Osborne has just finished introducing the 2012 Budget, and some details are already available on the HM Treasury website.

The 2011 Budget already promised a raise of the tax credits “enhancement rate” to 225% from April this year. That is up from 200% last year, and 175% before that.

This is coming in as promised. As are the removals of the PAYE/NIC caps, as far as we know. Good news so far.

The new decision came out of a consultation process, which is the introduction of so-called “above the line” R&D Tax Credits.

The idea there is to make it easier to link up an R&D project to a tax credit, rather than having to go through the finance department (in large companies) and thus effectively make this a matter for the CFO rather than the CTO.

For small businesses, we hope that this change won’t make too much difference. Though it will probably make things more complicated.

This is unfortunately an inevitable consequence of the government doing, well, almost anything.

It remains to be seen how the government will implement this change.

There will be consultations over the next year, devising ways to implement this, which we will try to get entrepreneurs involved in, as we did for Patent Box.