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'Above the Line' R&D Credit increased - Budget Update

25 Mar 2013

The Government has announced that the ‘above the line’ (ATL) credit for R&D will be introduced at a rate of 10% before tax, increased from the 9.1% rate as currently set out in draft legislation. This will increase the attractiveness of the UK as a location for large company R&D activity by further reducing the after tax cost of investment. 

Details of this announcement can be found on pages 42/43 and 78 of the Budget document (see link) http://cdn.hm-treasury.gov.uk/budget2013_complete.pdf

The MIA contributed to the recent consultation, on behalf of its members,  and helped to shape these proposals. As set out in the Budget document, the ATL credit will be;

  • payable to companies with no corporation tax liability;
  • available for R&D expenditure incurred on or after 1 April 2013; and
  • introduced alongside the existing 130% super-deduction, and legislated to fully replace the super-deduction in April 2016.

The final design of the ATL credit will be set out in Finance Bill 2013 legislation, due to be published on 28 March, which will include detailed changes to the legislation,  in response to points raised in technical consultation. 

The ATL credit will increase the visibility of R&D relief in company accounts, and provide greater financial and cash-flow support to companies with no corporation tax liability.

The Government believes the ATL credit will make R&D relief more effective at influencing large company investment decisions and help to increase the overall level of R&D activity in the UK.


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