Corporation tax relief

Our corporation tax service goes beyond simply keeping you compliant. By carrying out careful and detailed tax planning, our expert advisers can ensure that your business's liability to tax is minimised wherever possible. This means that you don't hand over a penny more to HMRC than you need to, leaving you with more profit to invest in running and growing your firm.

Research and development (R&D) tax credits

Part of the corporation tax planning we do for you will involve assessing your eligibility for R&D tax credits, which allow you to claim relief from corporation tax when you invest in R&D.

The qualifying criteria depend on the size of your business, the nature of the costs incurred and the type of R&D project being undertaken.

There are two schemes for R&D relief:

  • SME scheme - the tax relief on allowable R&D costs is 225 per cent.
  • large company scheme - the tax relief on allowable R&D costs is 130 per cent. Until March 2016, large companies can choose to claim the relief as a 10 per cent above the line credit instead of the 30 per cent deduction.

Our advisers will calculate your eligible costs and how much you might be entitled to claim.

You can find full details of R&D relief from corporation tax at the HMRC website.

The patent box

If your business makes profit from patented inventions and innovations, the patent box allows you to pay a lower rate of corporation tax on these profits. The relief is being phased in until it reaches 100 per cent in 2017, and the lower rate of corporation tax is 10 per cent.

A number of rules apply to this scheme, such as your company's involvement in the patent, the country of the issuing patent office and the way that your income from the patent is earned.

You will need to apply a percentage to your qualifying profits, depending on the financial year in which they are made:

  • 1 April 2013 to 31 March 2014: 60 per cent
  • 1 April 2014 to 31 March 2015: 70 per cent
  • 1 April 2015 to 31 March 2016: 80 per cent
  • 1 April 2016 to 31 March 2017: 90 per cent
  • from 1 April 2017: 100 per cent

The reduced 10 per cent rate is applied by subtracting an additional trading deduction from your corporation tax profits. This is calculated using the following formula:

RP × FY% × ((MR - IPR) ÷ MR)

In the formula:

  • RP is the profits of a company's trade relevant to patent box
  • FY% is the appropriate percentage for each financial year
  • MR is the main rate of corporation tax
  • IPR is the reduced rate of 10 per cent

Our advisers will help you identify qualifying profits and how and when to make your claim.

You can find full information about the patent box at the HMRC website.

Speak to an adviser

Call us on 0207 628 8080 or email fosters@mjb.co.uk or complete our contact form