MANUFACTURERS in Kirklees are being encouraged to take a fresh look at research and development tax relief schemes – and be prepared to take full credit for their sustained investment in innovation.

From April, 2013, the Government is planning to introduce a new “above the line” R&D tax credit that will be available to larger companies – those with more than 500 employees – regardless of whether they are making a profit or loss.

The proposals are currently subject to a wider consultation and views from businesses are being sought by June 29, 2012.

For some manufacturing businesses that have been used to making a loss, such as those investing in the research and development of emerging technologies that have not yet made it to market, R&D tax relief may not have been claimed previously.

The fact that such businesses will soon be able to claim a repayable tax credit to help balance the books even before their innovation goes into production, will be very welcome.

Gordon Singer, head of tax at PwC in Yorkshire, said: “Larger firms in the region are big spenders when it comes to R&D and they deserve to be able to take the credit for their investment.

“From April next year, it is proposed that even if they are making a loss they will be able to claim a repayable tax credit calculated by placing the sum invested in R&D above the line. For tax purposes, this means their R&D spend can increase the company’s profits before tax.”

Small and medium-sized businesses can benefit from tax relief of 125% on their R&D spend and the limit imposed on the level of relief payable, based on the company’s PAYE/NI contributions, has been removed altogether.