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What will the new ATL R&D Tax credit deliver?

The government has proposed to bring in a new 'above the line' R&D tax credit in April 2013. It has the potential to affect large loss making companies and SMEs in ways the current regime does not.

The design of the ATL credit regime under consultation has the following main features:

  • Financial support equivalent to at least 9.1% of qualifying R&D expenditure.
  • Treated as a taxable grant for accounting purposes (hence 'above the line').
  • Profitable companies will be able to offset the ATL credit against their corporation tax liabilities.
  • Loss making large companies will be able to claim a repayable credit (paid net of tax), which is unavailable under the current regime. 

Bear in mind that the proposal would mean more burdensome accounting as there would have to be more ample proof to support claims much earlier than is currently required.