TIGA member Grant Thornton, the accountancy firm, provides a summary of this week’s budget for TIGA members.
As part of the 2012 Budget the Government announced an ambition to make theUK the “technology hub of Europe” by supporting technological innovation andhelping creative, digital and other high end technology industries. In order toachieve this ambition the Chancellor announced some generous tax incentivesthat provide some real opportunities for companies in the computer gamingindustry to both save tax and attract investment.
Reliefs for you
Corporation tax reliefs for the computer gaming industry
Corporation tax reliefs for the production of culturally British video games are to be legislated for in Finance Bill 2013, and will take effect from 1 April 2013, subject to State aid approval. Consultation on the design will take place over the summer. Clearly this will be a real boost to the computer gamingindustry, and if you would like to know more about the proposals or would like your own views represented please contact Samantha Vanags (samantha.j.vanags@uk.gt.com) at Grant Thornton who would be happy to keep you up to date on this.
Research and development (R&D) relief
As previously announced, from 1 April 2012 R&D tax relief will become more generous, so pleaseensure your claims take advantage of the following changes:
- The rate of relief for small and medium-sized enterprises will increase from 200% to 225%.
- The R&D tax credit will no longer be capped by the amount of the company’s PAYE and nationalinsurance liability*, this will be particularly beneficial for companies with a low wage bill, so if youhave never claimed R&D tax credits this could be very useful.
- There will be no minimum annual expenditure limit needed to make a claim*.
- An “above the line” R&D tax credit will be introduced from next year for large companies giving acash benefit equivalent to a minimum rate of 9.1% of the qualifying spend.*for accounting periods ending on or after 1 April 2012
Corporation tax rate reduced
Corporation tax is being cut by a further one per cent, to take effect from 1 April 2012, meaning themain rate of corporation tax will fall to 24%. Further cuts of 1% are planned over the next two years,giving the UK a corporation tax rate of 22% by 1 April 2014.
Reliefs available to your investors
Seed Enterprise Investment Scheme (SEIS)Investments made by individuals on or after 6 April 2012 may benefit from a new type of EnterpriseInvestment Scheme (EIS) relief focused on smaller, early stage companies (broadly those with fewerthan 25 employees and assets worth less than £200,000). The main features of the SEIS are.
- Income tax relief will be available to investors at a rate of 50% of the amount subscribed, up to£100,000 per individual.
- Any one company will be able to raise investment of up to £150,000 under the SEIS; although thiswill be a cumulative limit and not an annual one.
- As with 'normal' EIS relief the shares must be retained for at least three years, and a disposal afterthis time will be exempt from capital gains tax (CGT).
- An important difference to EIS will be that chargeable gains realised from disposals of any assets in2012/13 will be exempt from CGT if invested via the SEIS in the same year.
Enterprise Investment Scheme (EIS)
As well as the new SEIS above, a number of increases will be made to EIS relief;
- The maximum annual amount that an individual can invest under the EIS will be doubled to£1 million for 2012/13 onwards and there will no longer be any minimum investment.
- For shares in investee companies that are issued on or after 6 April 2012, the maximum annualcombined amount that can be invested in any one company under these schemes is to beincreased from £2 million to £5 million.
- The size limits for qualifying companies have also increased:- a company must now have fewer than 250 employees (previously 50);- the gross assets of the company must be less than £15 million immediately before the share issueand £16 million after (previously £7 million and £8 million respectively).
- Previously loans made to the company were considered when determining whether EIS would beavailable. This will no longer be the case, meaning any new loans given to the company beforepurchasing equity will no longer prejudice EIS claims.
Some of these changes are subject to EU State aid approval being granted.
Grant Thornton are a leading firm of accountants and tax advisers who can advise you on theimpact and opportunities that the Budget changes will have for you. To read our Budgetanalysis please visit www.grant-thornton.co.uk or contact Samantha Vanags(samantha.j.vangs@uk.gt.com).