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Whilst the Summer Budget was thin on the ground with regard to specifics for the Science and Technology Sector, there were plenty of changes that will impact such businesses.
There was no further new s on the Corporation Tax relief for patented income, The Patent Box, which requires amendment following recent comments from the OECD nor were there any changes to the Research & Development Tax Relief uplift rate for SMEs of 130% (was 125% pre 1 April).
There was a minor change to Research & Development Expenditure Credits (RDEC). RDEC was introduced for large companies and SMEs unable to claim under the SME scheme and some universities and charities have since made claims under RDEC. This was never the intention (spin out companies can claim) and this has been confirmed in the Budget and applies from 1 August.
At last we have some certainty on Annual Investment Allowance (AIA), the amount that attracts tax relief in the year of expenditure on capital items such as plant and machinery. This is currently £500,000 and has fluctuated numerous times since it’s introduction a few years ago. It was due to fall to £25,000 from 1 January but will now fall to a much more reasonable amount of £200,000 and will remain as such. Businesses which acquire assets used in R&D can make use of both AIA and R&D Capital Allowances to ensure they maximise the immediate tax relief on capital expenditure.
A surprise announcement was the fall in the Corporation tax rate from 20% to 19%, from April 2017, and 18% from April 2020. A less welcome announcement was the abolition of tax relief for amortisation of goodwill with immediate effect for acquisitions made on or after 8 July.
Remuneration planning will need more careful consideration from next year with the introduction of a £5,000 dividend allowance together with increased tax rates on dividends, to apply from April 2016. The NIC employment allowance will be increased from £2,000 to £3,000 from April 2016 but will no longer be available to businesses with only one employee.
Finally, bids are being invited for the creation of new Enterprise Zones which offer significant tax advantages.
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