R&D tax measures will boost jobs, says KPMGAlex Mayhew-SmithChanges to R&D tax outlined in last week's Budget could help to take the electronics industry out of its slump and create more high-tech jobs in the UK.
"This new relief should help to encourage investment in a key sector of the UK manufacturing industry and in turn, help boost the recovery of the global electronics industry," said Mark Grant, electronics industry manager at financial firm KPMG.
The organisation said while companies may not increase overall worldwide spending on R&D in the current economic climate, they do have flexibility in where they spend their money. "These measures should help the UK increase its share of global R&D expenditure," said KPMG.
Other measures in the Budget included tax changes affecting small businesses.
l R&D tax credit for large firms now complement the existing scheme for SMEs. This will provide a headline 25 per cent rate of reduction for qualifying R&D expenditure against taxable profits. The net benefit is 7.5 per cent.
Dr Peter Cotgreave, director of Save British Science (SBS), said: "Some people may complain that this is a relatively modest measure, but we need to put it in context. Other taxes are rising, and big companies must demonstrate they are prepared to take advantage of this credit before it can be expanded. Except in the pharmaceuticals and aerospace industries, UK firms invest less than their competitors in research." Organisations had been hoping for a 10 per cent net benefit.
l Reform of VAT for small firms with an increased VAT registration threshold from £54,000 to £55,000 and a new flat rate scheme to cut compliance costs.
l The introduction of tax relief for intangible assets, including intellectual property, to be back-dated to the beginning of April.
l Corporation starting tax rate reduced from 10 per cent to zero. An estimated 150 companies with taxable profits of less than £10,000 will no longer pay a corporation tax. The small companies rate will be reduced by 1 per cent to 19 per cent, affecting an estimated 335,000 firms.
l The DTI is to consult on a national strategy for start-ups
l A change to the way foreign companies pay tax for their subsidiary businesses based in the UK. Capital will be attributed to a UK branch for tax purposes based on the capital it would need to trade as an independent firm.