In a report (pdf, on the SMMT website) published this week (and you have to love a report that starts with a quote from Julius Caesar), the manufacturing & motor associations EEF and SMMT call for changes to the R&D tax relief. They’re looking for a “cash benefit or redeemable credit at the point R&D costs arise”, rather than a “relatively opaque offset against corporation tax payments”.
The state of Louisiana gives a 35% state payroll tax credit on all Louisiana labor directly involved in the development of video games (and so doesn’t include administration or executive work) and a 25% tax credit on all the direct support costs such as premises leases, computers and training. The state estimates these reliefs reduce the cost of doing business in the games industry in the state by around 30% overall.
Tom Watson MP (Labour) is trying to re-start the debate on tax credits for the UK games industry with an Early Day Motion (EDM – Early day motion 1781), calling for improvements to R&D tax credits, particularly an extension for the tax break to include expenditure on premises and the costs of applying for IP protection and design. The EDM is clearly prompted by Tiga, the UK games industry trade association, but the extension requested appears general rather than specific to the games industry.
An Early Day Motion is mostly chasing publicity – it has no real prospect of debate in Parliament – so don’t expect to see anything change in the Finance Bill. At the time of writing the EDM had attracted a grand total of 4 signatures, including that of Watson, but they are at least cross-party.
HMRC has published the latest set of details on the number and value of R&D tax relief and R&D tax credit claims, covering claims in 2008-9. There is an increase in the number and value of claims, but it is surprisingly small considering that 2008-9 was the catch-up deadline to get in claims for relief on expenditure over the previous six years (the relief now has to be claimed in the company tax return or amended return).
The total number of companies claiming the relief was 8,.350 in 2008-9 – that seems a very low number, and it may make the scheme vulnerable to change/removal in the upcoming consultation on how IP is taxed in the UK.
The UK Pre-Budget Report today had a couple of IP moments – overall potentially useful, but really just not trying hard enough. It’s another missed opportunity, doing little or nothing to support the majority of IP-focussed business.
From A&L Goodbody, news that the Irish Finance Bill, published on 7 May, provides for tax depreciation for expenditure incurred after 7 May 2009 on the acquisition of qualifying IP and extends the stamp duty exemption to ensure that transfers of IP qualifying for tax depreciation also qualify for exemption from stamp duty.
The relief is available up to a maximum of 80% of the taxable income against which the deduction may be taken (excess depreciation may be carried forward). As Ireland’s corporation tax rate for trading income is 12.5%, the new measures potentially allow for a 2.5% effective rate to be achieved (20% at 12.5%).
In a move counter to almost all other countries, the New Zealand government has announced it is abolishing R&D tax relief from the 2009/2010 income year.