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Cap on relief
Key points
- The research and development PAYE cap for small and medium-sized enterprises applies from 1 April.
- Under the cap SMEs can claim R&D tax credits of up to £20 000 plus 300% of its PAYE and NI liability.
- The previous PAYE cap was scrapped in 2012.
- Some legitimate claims could be affected.
The amount that loss-making small and medium sized enterprises (SMEs) can claim in research and development (R&D) tax credits will be capped as part of changes originally slated for introduction last year.
The so-called PAYE cap is designed to prevent abuse of this valuable form of tax relief and comes into effect on 1 April. However there has been a last minute change to the commencement rules. In an email to R&D consultative committee members on Budget day HMRC indicated that the draft legislation will now not include a ‘straddle’ rule and the cap will...
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