Loss - Making SME's Rejoice !

 

Finally, loss-making SMEs have something to smile about. Investing in cutting edge science, technology and engineering can be a thankless task, at least until you have established yourself and start turning a profit. So it’s good to know that, as of 2014’s Budget speech, loss-making SMEs have a new champion.

 

Reversing the downward trend of recent years, our ‘loss leader’ Chancellor George Osborne announced an increase in the rate of surrender of R&D losses for a tax credit, for loss-making SMEs from 11% to 14.5% for expenditure incurred on or after 1 April 2014.

 

What does that mean for you if you’re a loss-making SME? Well in a nutshell more money! If you’re numerically minded, follow the example below to discover how loss-making SMEs could be making claims up to one third larger on a like–for–like basis. If not, you might want to skip the next paragraph and go straight to what you could do with the dosh.

 

Okay, so imagine you’re an SME with losses of £100,000 and £100,000 of eligible R&D spend, according to HMRC’s definition of qualifying R&D activity. Under the UK Government’s R&D tax relief scheme, SMEs can deduct up to 225% of qualifying expenditure when calculating their profit/loss position for tax purposes, supercharging the R&D expenditure to £225,000.

Now comes the interesting bit… if the company chose to surrender its R&D related losses for a payable tax credit from HMRC, as it’s perfectly entitled to do under the scheme, it would receive 11% of £225,000 – or £24,750 – under the current, pre–2014 Budget rate. Post–2014 Budget, the company will receive 14.5% of its adjusted losses (if the expenditure incurred on or after 1st April 2014) – or £32,625 – almost one third more!

 

This extra money can be used for all kinds of things – from reinvesting in further development to funding expansion plans, even just easing the cash flow.

 

Complicated though the scheme’s legislation undoubtedly is, Brian Williamson of Jumpstart, the UK’s leading technical R&D tax relief specialist, says: “I would urge all loss-making SMEs – whether they think they qualify for the scheme or not – to look into this without delay. It doesn’t cost you a penny to get an expert opinion, but could be worth thousands of pounds.”

 

With the UK Government providing additional incentives for small and start-up businesses to invest in R&D and Jumpstart doing everything in its power to help companies claim the R&D tax relief and credit they’re entitled to, the present is looking pretty bright for loss-making SMEs in particular and UK innovation generally, never mind the future.

Author - Laetitia Guichard

Goliath, Meet David

 

For those of you interested in gaming, the shiny new generation of consoles arrived late last year. As gamers hunker down to complete every last level of the launch titles, we ask what’s next.

 

Over the last few years, the business of releasing AAA quality blockbuster titles has been getting more and more expensive. Creating detailed Full HD quality assets and the large-scale immersive worlds that gamers want to explore doesn’t come cheap.

 

Proving that the dreaded cash flow occasionally proves mightier than the sword, some of the big publishers are shying away from risky new ventures and relying instead on annual rehashes of so-called ‘safe franchises’, such as Call of Duty, Halo and FIFA. Gamers who don’t necessarily see the cost of development – only a lack of creative vision – aren’t happy!

 

Not for the first time, indie games development is coming to the rescue.

 

Sony, for example, is shouting about all the indie titles it’s supporting on the PS4, while the PS Vita has essentially become a portable indie game playing machine. Microsoft, meanwhile, announced its ID@Xbox program last year and is majoring on the potential to turn every Xbox One into a development platform for self-publishing.

 

AAA quality games are of course still being developed. That won’t stop, nor should it. But with the big players increasingly promoting indie developers and indie games as a benefit of choosing their platform, perhaps the David's of this world can re-inject a little creative vision and risk taking into the games arena that has been sadly lacking of late.

 

Me? I guess I’m part of the problem.

 

Titanfall here I come baby!!!

 

Lock and load ;-)

Author - Bryan Ford

Budget 2014

Encouraging business investment in R&D, cutting-edge Science, Technology and Engineering

 

In his Budget 2014 speech, Chancellor George Osborne announced further measures to support business and further economic growth, by encouraging Research and Development (R&D) and supporting investment into new, cutting edge technologies.

 

The Chancellor recognized that investment in cutting edge Science, Technology and Engineering was vital in making the UK more competitive internationally. 

 

To this effect he announced:

• The revision of the rate of the R&D tax credit for loss-making small businesses from 11% to 14.5%
• The increase and extension of the Annual Investment Allowance to 2015
• The establishment of new centres for doctoral training, for Cell Therapy and for Graphene.
• The establishment of the Alan Turing Institute for research into big data and algorithm.

Mr Osbourne said “If Britain isn’t leading the world in science and technology and engineering, then we are condemning our country to fall behind.”

 

At Jumpstart, we wholeheartedly welcome these budget measures, as they ensure the UK builds on its historically proven strength in Science and Technology to secure its long-term prosperity. 

 

R&D tax relief creates the right climate for enterprise and innovation, which are crucial factors in maintaining high and stable growth.


Author - Laetitia Guichard