Original post by Anh Nguyen via Computerworld UK

Larger companies will also get R&D tax credits

Chancellor George Osborne announced on Tuesday a new tax relief to encourage investment in start-up businesses.

In today’s Autumn Statement, Osborne revealed that anyone investing up to £100,000 in a qualifying new start-up will be eligible for income tax relief of 50 percent, regardless of the rate at which they pay tax.

The annual investment limit for individuals will be £100,000 and companies will have a cumulative investment limit of £150,000

The tax break will come into effect from April 2012, and is part of the government’s new Seed Enterprise Investment Scheme (SEIS).

In addition, the scheme will offer a capital gains tax exemption on gains realised in 2012 to 2013 and then invested through SEIS in the same year.

“We welcome the Chancellor’s announcement for business start-ups and look forward to the schemes getting implemented and becoming a ground reality for the hundreds of start-ups in our tech community,” said Shawn Ghosh, founder of the London Silicon Roundabout Group and CEO of TechMeetups.

Meanwhile, Osborne announced additional funding of £75 million to support technology-based SMEs in their development, demonstration and commercialising of new products and services.

The government is also keen to support innovation in larger companies with the introduction of new tax credits.

“We will introduce a new ‘above the line’ research and development tax credit in 2013 that will increase its visibility and generosity,” Osborne told the House of Commons.

This R&D tax credit was welcomed by Ernst & Young tax experts.

“This has been a real bugbear for industry and has impaired the effectiveness of the relief to date. Moving this to an “above the line” credit will mean that this will become far more effective at driving innovation. Now we wait to see the detail and, of course, the generosity of the credit,” said Frank Buffone, head of R&D tax relief at Ernst & Young.

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