R&D Tax reliefs: Consultation

R&D Tax reliefs: Consultation

The government has an ambitious target to raise total investment in research and development to 2.4% of UK GDP by 2027. R&D tax reliefs have a key role in incentivising this investment by reducing the costs of innovation. It is therefore important to ensure that the reliefs remain up-to-date, competitive and well-targeted.

At Budget 2021 the government announced a review of the reliefs, supported by a consultation with stakeholders. This consultation will explore the nature of private-sector R&D investment in the UK, how that is supported or otherwise influenced by the R&D relief schemes, and where changes may be appropriate.

R&D Tax reliefs: Consultation

What the Budget 2021 means for small businesses

The Chancellor, Rushi Sunak, announced in the Spring Budget 2021, that small businesses will have CJRS and SEISS extended.

Coronavirus Job Retention Scheme (CJRS)

The furlough scheme has been extended to September 2021 across the UK. This means limited company directors will still be able to claim if they have been affected by coronavirus at 80% of the current salary for hours not worked, until July.

The government is asking all employers to start contributing to their employee’s cost of unworked hours starting from July.  In July the contribution will be 10%, August 20% and September 20% as a strategy to kickstart the economy.

Self-employment Income Support Scheme (SEISS)

For self-employed workers, the Chancellor has extended the Self Employment Income Support scheme to September 2021.  600,000 more people will be able to claim for the first time.

To be eligble for this scheme, the new claimants must have their 2020/21 tax returns submitted by 2nd March 2021.

The fifth grant is to cover May to September. 

Corporation tax

Corporation tax will rise in 2023 to 25% from 19%, but the good news is that small businesses with trading profits of under £50,000 will continue to be taxed at 19%.  If a business has profits of between £50,000 and £250,000, the tax will be tapered.

HMRC have assigned £3.5 billion to combat covid-related fraud

HMRC have assigned £3.5 billion to combat covid-related fraud

Over £100m will be invested by the government for a taxpayer protection taskforce of 1,265 HMRC staff to combat the estimated £3.5bn fraudulent Covid-19 claims.

The taskforce will focus on claims of the Coronvirus Job Retention Scheme (CJRS) and Self Employment Income Support Scheme (SEISS) which could lead to being fraudulent. Law enforcement will be strengthened for Bounce Back Loans to deter fraud.

In the 2010 Spending Review, the HMRC recruited 1000 staff to battle tax fraud which led to a significant increase in prosecution in under 5 years.  This outcome made HMRC the largest economic crime agency in the UK.