Tax incentives for UK innovation

Tax incentives for UK innovation

Global software, engineering, pharmaceutical or creative industry groups could benefit from the various tax incentives if they set-up UK research and development centres.  The UK provides incentives for both the “development” stages as well as the “exploitation” stages of innovation.  Some incentives such as the R&D scheme give tax relief by way of “enhanced deduction”.  Others such as the newly introduced RDEC provide relief by way of “tax credits” whilst still others such as the “patent box” scheme incentivize companies by way of a lower rate of corporation tax. The various tax incentives for UK innovation are listed below:

  • R&D costs: by way of “enhanced deduction” tax relief against corporation tax.
  • RDEC (R&D Expenditure Credit):  an “above the line” taxable “credit” scheme.
  • Patent box: 10% corporation tax rate available for developing IP/ patented inventions.
  • Vaccine research relief: a “top up” to the R&D scheme.
  • Research development allowances: for “capital” expenditure incurred in R&D activity.
  • Creative sector tax relief.
  • Tax amortization for “corporate intangibles”.

An outline of each of the above incentives is provided below.

The UK government provides a range of very attractive tax breaks for setting-up high-technology and creative businesses in the UK.

RKG Consulting can provide in-depth advice regarding the tax breaks available to your organisation if you were contemplating setting up a UK company, an R&D facility, making an acquisition in the UK or simply engaging in hi-tech or creative activities in the UK.


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