Motorsport R&D Tax Credit Update
From April 2020, the amount of payable credit that a qualifying loss-making business can receive through the relief in any one year will be capped. The cap will be three times the company's total PAYE and NICs liability for that year.
- This will deter abuse because fraudulent companies typically do not employ many people or pay PAYE and NICs. The cap will therefore ensure that the relief goes to companies that have a real UK presence.
- Close to 95% of companies currently claiming the payable credit will be unaffected.
- Nevertheless, the government recognises that some genuine companies with UK R&D activity may have low PAYE and NICs liability relative to R&D spend and therefore could be affected by this measure, despite the cap being set at three times their liability.
- In these cases, the companies will still be able to claim payable credit up to the cap with any unused losses carried forward to be set against future profits. The government will also consult on how the cap will be applied, to minimise any impact on genuine UK businesses.
For more information on the above, please visit the HMRC link.
According to the UK government “R&D Tax credits are the single most important funds for SME’s in the UK”. If you do not currently claim, or are unsure how to do so, the MIA’s ‘R&D Tax Credit Information Update Programme’ can help you.
Many motorsport companies stand to benefit substantially from the R&D Tax Credit scheme, yet most do not successfully claim their share. The MIA’s 2013 National Review of the Motorsport Valley Business Cluster found that:
15% of motorsport companies spent OVER 25% of sales turnover on R&D
Motorsport companies spent an average of 12% of sales turnover on R&D
Only 20% claimed an R&D Tax Credit in the last 3 years, with just 13% registering patents
- 2016 Motorsport R&D Tax Credit Guidelines: Part 1 (here) & Part 2 (here)
- Harris & Co: R&D Tax Credits Advance Assurance (video) - here
- Motorsport R&D Tax Credit Programme: Top Tips from the Experts, here.
- Sage Exchange: Features and benefits of Patent Box reforms, here.
- Harris & co: Case Study 1, here.
- Harris & co: Case Study 2, here.
- HMRC: Voluntary Advanced Assurances for smaller businesses claiming R&D Tax Relief, here.
- HMRC: Evaluation from R&D Tax Credit (March 2015 Working Paper), here.
- HMRC: Presentation on R&D Tax Relief, here.
- HMRC: R&D Tax Credit guidelines and rates of relief, here.
- HMRC: R&D Tax Credits: Statistics and information regarding uptake, cost and nature of claims, here.
- Harris & Co: 'R&D Tax Credits for Motorsport Businesses': Read how motorsport firms aren't claiming their share, here.
- CIOT: Improving Access to R&D Tax Credits for Small Business, here.
- R&D Tax Specialists: Case Study - Formula 1 cooling system relief valve, here.
- R&D Tax Specialists: The Research and Development Company Overview, here.
- Rawlinson & Hunter: R&D Tax Credits Overview, here.
- Rawlinson & Hunter: R&D Expenditure Credit Overview, here.
- Rawlinson & Hunter: Patent Box Overview, here.
- Squire Patton Boggs: 'How to Make Sure Your IP is Protected': Useful advice on protecting your IP, here.
- Squire Patton Boggs: Patent Box - how to maximise the benefits, here.
For more information please contact the MIA Team on +44 (0)2476 692 600
or email firstname.lastname@example.org
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