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Budget: Brown opens up R&D tax credits to larger firms

Christian Annesley

Technology suppliers have welcomed chancellor Gordon Brown’s budget announcement that research and development tax credits are to be extended to firms with up to 500 employees, up from 250 currently.

Tom Wills-Sandford, deputy director general of hi-tech industry body Intellect, said the tax credit extension would “help SMEs who originally fell out of this bracket.”

He said software companies would “particularly benefit, as a large number currently fall into this category.”

Intellect said the chancellor was also on course to introduce training for tax inspectors to make sure they understand software R&D procedures.

“A clearer outline of the training plans is expected this summer and we look forward to working with HM Revenue & Customs when laying the foundations,” it said.

For IT contractors and consultants, the budget also offers the promise of a simpler tax and national insurance regime in the future – a review of the current arrangements having been commissioned.

The Professional Contractors Group said the planned review offered “a clear opportunity to address the unfair and inconsistent intermediaries legislation, known as IR35, as well as the enormous complexity of the taxation of freelance consultants and contractors.”

 


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