Have you come across Research and Development relief (R&D) before? If you own or run a company, this relief could be hugely advantageous to you.

HMRC are really keen right now to help companies in developing new and exciting products; these range from anything to developing mobile phone apps to creating a new part for a bike; if the product is new and innovative, it could be eligible for this relief.

If eligible, the company can get an additional deduction on the qualifying expenditure of 130% of that expense – that means that for every £100 spent on R&D, the company saves £24.70.

In addition, if the company makes a loss, which is common in the early developmental stages of a product, the company can turn a loss into an almost immediate cash repayment. of up to 14.5% of the R&D deduction.

Here at Frost Wiltshire, we have considerable experience in preparing and submitting R&D claims and have 100% success rate in doing so.

If this is of interest to you, give us a call and speak to our tax director, Mel Hackney, who will be able to provide more guidance as to whether the expenditure is likely to be classified as R&D.

By Mel Hackney

When you sell your home, if it is the only property you own, it is unlikely you will pay any capital gains tax. This is because a relief called Private Residence Relief (PRR) is applied.

If you own a second property and that property is rented out, a relief known as ‘letting relief’ may be available on the second property. The impact of letting relief is to reduce the amount tax payable on the eventual sale of that second property.

At Budget 2018, the government announced that letting relief will be changed with effect from 6 April 2020, so that it only applies where an owner is in shared occupancy with the tenant.

Once implemented this may lead to a significant change in how much tax is payable on the sale of a property, and will no doubt affect many landlords.

For example, Bob owns 2 houses, Acorn Cottage and Highgrove Terrace. Bob lives in Highgrove Terrace and rents out Acorn Cottage. Bob used to live in Acorn Cottage.

Under the current rules, when Bob sells Acorn Cottage, he will be able to claim both PRR and letting relief for the full period of ownership.

However, under the new rules, Bob can no longer claim letting relief unless he lives in the property at the same time as the tenant. As such, if Bob sells Acorn Cottage in 2022, there would potentially be a gain on the sale of the property.

These rules are extremely complex, so can be tricky to interpret. If you would like to find out more about the changes to tax on property, or about any of our services including tax planning, please contact Mel Hackney.