Jonathan Scott, Tax Partner at Haines Watts discusses what the Autumn Budget will mean for tax relief in the months to come.
The Autumn Budget set out the Chancellor’s plans for an economy which is “fit for a new age”, tackling everything from unemployment and NHS funding, to levelling up the UK. When it comes to economic recovery, innovating is going to be key, so it’s great to see the Government investing in initiatives to drive business forward and promote inward investment. The Budget also included some key changes to tax incentives and reliefs, which your business needs to be aware of if you are claiming tax relief.
Research and Development
After years of consideration, the research and development tax relief scheme has finally been extended to include cloud computing and data costs as of 1 April 2023. This is a huge step in the right direction when it comes to modernising the scheme and will have a huge impact on businesses who are more digitally-focused or data-driven, such as gaming companies and financial services, by allowing them to make the most of the invaluable relief.
It’s worth noting that on the same date the Government will be implementing new rules to the R&D tax relief schemes to exclude costs incurred on overseas R&D activities from the scope of relief. If you are claiming relief for international R&D expenditure, now is the time to start having conversations with your advisors to ensure you’re planning ahead not caught out going forward.
On top of the costs of research and development tax relief, the Chancellor also announced a £20bn commitment to UK-based R&D per year, through multiple funds and loans. If your business is considering applying for funding, you’ll need to keep in mind that it could have an impact on your ability to claim tax relief. If you’re unsure on where you stand, it’s always a safe bet to consult a professional on the matter.
Capital Allowances
It’s also great to see that the temporary £1m cap on annual investment allowance has been extended until March 2023. This will be hugely beneficial for companies like manufacturers who are investing in plant and machinery, by offering them 100% relief for qualifying costs.
This will sit hand in hand with the Capital Allowance Super Deduction, which allows businesses to create tax savings of 25p for every £1 spent on new assets to keep within the company.
It’s important to take careful consideration when it comes to deciding which Capital Allowances will provide the best relief for you and your business, and the best available option might not always be obvious. To make sure you’re maximising the value of your claim, we’d always recommend speaking to an advisor who specialises in tax relief.
Creative Industries Tax Relief
Cultural organisations have faced the brunt of the pandemic. Being forced to shut their doors for the best part of a year and then having to limit capacity because of social distancing restrictions, has had an inevitably major impact on cashflow for many.
With this in mind, it’s great to see that the Chancellor has further invested in the Creative Industries Tax Reliefs. Museums and Galleries Exhibitions Tax Relief (MGETR) has been extended for a further two years until 31 March 2024, and the rates of MGETR; Theatre Tax Relief; Orchestra Tax Relief and Theatre Tax Relief have all been temporarily doubled from now until 31 March 2023.
The rates of relief will then start to reduce from 2023, and back to their former rates on 1 April 2024. So if your organisation is considering claiming, now is the time to do so, to ensure you’re making the most out of the relief.
Unlocking trapped cash in your business
Whether it’s helping you to make the most of the Annual Investment Allowance or Creative Industries Tax Reliefs; assessing your position when it comes to the new avenues of funding and R&D tax relief, or even helping you to submit your tax relief claim, our tax incentives and reliefs specialists are on hand to help. www.hwc
