Budget Round-up – Tax credit system may boost R&D.

Large companies had the carrot of future tax credits for research and development dangled in front of them but the chancellor made no firm commitments for immediate action.

Gordon Brown announced he would be consulting on the introduction of a corporation tax super deduction to encourage more spending on certain R&D projects.

‘I see this as an essential tax relief to aid growth of business in the UK,’ said Alastair Kendrick, tax director at Ernst & Young. ‘The chancellor has clearly listened and responded to the demands of business who have been betting hard for relief in this area,’ he added.

But Kendrick warned: ‘This is promising something for tomorrow. My concern is whether it will materialise.’

Tax experts at Deloitte & Touche said: ‘This will be welcomed by large UK hi-tech companies that did not benefit from last year’s tax relief.

‘Most of the debate is expected over how the base expenditure is to be calculated such that it will be easy to understand, practical to operate and will not lead to peaks and troughs.’

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