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Finance Act 2014

Background Note

3.Additional tax relief for expenditure on research and development (R&D) was introduced in 2000 for SMEs.

4.The SME R&D relief currently gives an additional deduction from profits at a rate of   125 per cent of the qualifying expenditure. This combined with the normal deduction for such expenditure, gives a total deduction of 225 per cent.

5.A loss-making SME is able to obtain a payable R&D tax credit at a rate of 11 per cent of the lower of its trading loss for the period and 225% of the qualifying R&D expenditure incurred, giving a maximum payment of 24.75 per cent of the original expenditure.  The rate of payable credit is to be increased to 14.5 per cent for expenditure incurred on or after          1 April 2014, giving a maximum payment of 32.625 per cent of the original expenditure.

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Explanatory Notes

Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.

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