Regional map

Tax incentives

A variety of tax credits, tax relief and other incentives available to support businesses throughout East Sussex.

Research and Development (R&D) tax credits

Innovative business owners could be missing out on thousands of pounds of help from the government. This is because the government wants companies that are spending time and money improving their business to claim cash back for these innovations.

Designed to be one of the biggest funding mechanisms for Research and Development in the UK, R&D tax credits can substantially reduce tax bills or give businesses a cash injection. To qualify, claims must be for a UK limited company that is carrying out innovation activity.

Many businesses are missing out because they wrongly believe they’re only eligible if they are a pharmaceutical company or have a dedicated R&D facility - this is simply not true. R&D tax credits can be claimed for a much wider range of activities than many businesses realise and it rewards those businesses who are involved in innovation.

R&D tax credits work by reducing a company’s tax bill by an amount equal to a percentage of the company’s allowable R&D expenditure.

There are two schemes for claiming relief:

  • The Small or Medium-sized Enterprise (SME) Scheme
  • The Large Company Scheme

An SME may claim a higher rate of relief than a large company. Also, an SME which has no tax bill to reduce may claim a cash payment instead.

Rate of tax relief or credit under the SME Scheme:

The tax relief on allowable R&D costs is 200 per cent - that is, for each £100 of qualifying costs, your company or organisation could have its Corporation Tax bill reduced by an additional £100 on top of the £100 spent.

If instead there is an allowable trading loss for the period, this can be increased by 100 per cent of the qualifying R&D costs - so that’s £100 for each £100 spent. This loss can be carried forward in the normal way, but only if you choose not to convert it to tax credits.

Rate of tax relief under the Large Company Scheme:

The tax relief on allowable R&D costs is 130 per cent - that is, for each £100 of qualifying costs, your company or organisation could have the income on which Corporation Tax is paid reduced by an additional £30 on top of the £100 spent.

If instead there is an allowable trading loss for the period, this can be increased by 30 per cent of the qualifying R&D costs - £30 for each £100 spent. This loss can be carried forward or back in the normal way.

 In the context of R&D tax credits, a SME is a company or organisation with fewer than 500 employees and either of the following:

  • an annual turnover not exceeding €100m
  • a balance sheet not exceeding €86m.

Visit the HMRC website for more information on R&D tax credits.

The Patent Box

The Patent Box enables companies to apply a lower rate of Corporation Tax to profits from its patented inventions and certain other innovations. The relief is being phased in and the lower rate of Corporation Tax to be applied will be 10 per cent.

In many cases the profit attributed to patents is calculated from total profits using a step-by-step method, however smaller claims benefit from a simplified calculation. Businesses need to apply an appropriate percentage to the profits earned from its patented inventions. The appropriate percentages for each financial year are:

  • 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

There are specialist HMRC units located throughout the UK who are able to assist with claims. These units are organised on a geographical basis, dealing with claims from companies whose main research and development base is within their postcode allocation. These units will also answer your Patent Box questions. You can contact them before making a claim or while you are putting together your claim.

In addition, HMRC has a free pre-recorded 'webinar' that provides a basic overview and introduction to R&D tax credits and the Patent Box, and explains who is eligible to claim, how to make a claim and where to get further help and advice for your business.

Research Councils UK

Research Councils UK (RCUK) invests £3billion a year across the breadth of disciplines with the focus on funding excellent research that leads to economic and societal impact through the contribution of research to the growth, prosperity and well-being of the UK. RCUK builds productive partnerships with businesses of every size to enable them to work with world-class researchers to turn knowledge into innovation and growth.

The seven Research Councils work in partnership with a number of stakeholders including industry, the public sector, civil society organisations and the Technology Strategy Board. Working together as RCUK allows the Research Councils to ensure plans and strategies are aligned across key economic sectors.

Research Councils fund research in collaboration with over 2,500 user organisations, including large corporations and around 1,000 of these collaborations are with SMEs. Additionally, they also support the two-way flow of talented people between business and the research base, collaborative doctoral studentships, enterprise training, commercialisation and development opportunities and provide access to world leading facilities, campuses and data.

Research Councils also have a national and international picture of where research excellence lies, understanding trends, behaviours and uncertainties at the leading edge. The Research Councils play a brokering role by talking directly to companies on how to engage with the research base bringing stakeholders and academics together to build relationships and networks also providing access to skills and expertise to deliver new innovative solutions and products.

For further information visit Research Council UK website, phone 01793 444420 or email info@rcuk.ac.uk.

Creative Industry Tax Reliefs

Creative industry tax reliefs (CITR) are a group of 5 Corporation Tax reliefs that allow qualifying companies to claim a larger deduction, or in some circumstances claim a payable tax credit when calculating their taxable profits.

These reliefs - Film Tax Relief, Animation Tax Relief, High-end Television Tax Relief, Video Games Tax Relief and Theatre Tax Relief - work by increasing the amount of allowable expenditure. Where a company makes a loss, it may be able to ‘surrender’ the loss and convert some or all of it into a payable tax credit.

For more details about on who can claim and how to apply, visit the HRMC website.

University of Brighton

The University of Brighton offers a wide variety of expertise to businesses of all types and sizes including professional training courses, consultancy, research and development, collaborative research opportunities, student placements and internships.

For more information email businesshelpdesk@brighton.ac.uk or phone 01273 643098.

University of Sussex

The University of Sussex welcomes approaches from business and other organisations with new ideas for collaborative projects which could form the basis for a funded research partnership.

To find out more about the funding schemes which may be available to support such projects and developments email business@sussex.ac.uk or phone 01273 873831.