R&D tax help for hi-techs

A TIMELY boost to hi-tech industries was signalled by the Chancellor when he unveiled plans to widen a tax incentive scheme for research and development spending and to simplify the way business treats the value of intellectual property, writes James Maclean.

But news of the changes was tempered by Brown's admission that further consultation was required before the plans are enacted. The Confederation of British Industry has been pressing the Chancellor to expand the scope of the existing tax credits scheme introduced last year for small and medium-sized businesses.

The consultation on tax credits for R&D spending is likely to study four options for enlarging the scheme but a final proposal must avoid ruffling feathers in Brussels through competition concerns.

It must also keep a lid on potential costs which could rise to 1.3 billion a year if the current 10% effective tax credit for R&D spending by smaller firms goes industry-wide, but reverse a 30-year decline in the amount British companies spend developing new technologies relative to their major international competitors.

Many experts now anticipate an enlarged scheme will apply only to increases by large companies above and beyond current R&D spending. That, according to Price-waterhouseCoopers, would reduce the annual cost to the Government to about between 100 million and 250 million.

Copyright 2001
Provided by ProQuest Information and Learning Company. All rights Reserved.