Room for optimism in uncertain times

By Jillian Thomas (pictured), Managing Director at Chamber patron Future Life Wealth Management

We are living through thought- provoking times. As I write, the stock markets have just had their worst day for more than 30 years. Shares around the world have been tumbling. But it may not be as straightforward – or as gloomy – as it appears. Some of the funds you may

expect to struggle are not falling as fast as expected and the market has rallied somewhat as I write. Stock markets have been barred

of short selling, which may have had a part to play in the slump. Short selling is where a seller borrows shares and sells them, planning to buy them back when their value drops, and return the borrowed shares back to the original owner. It can drag the markets down, as in 2008. It may have had some impact. So, it may be there are added pressures on

share values, created not in the ‘real’ world, but in the ‘dark rooms’ where people trade on anonymous trading platforms. Out in the real world, UK plc is

not in a bad place. We are in the unique situation where we have been preparing for one possible economic ‘shock’, Brexit, only to be

R&D tax breaks for green companies

By Chamber patron Shorts

For companies working to find solutions to the changes generated by environmental issues, an unexpected bonus can be the availability of R&D tax relief which can help fund some of the developments undertaken. The Government supports innovative companies by offering tax relief worth

up to almost 25% of qualifying costs on eligible projects and even if you wouldn’t consider your company to be innovative in the ordinary course of business, adapting to changes driven by regulatory requirements, the market or internal ethics can mean that developments undertaken will be eligible for relief.

WHAT IS R&D? R&D tax relief is available to companies that undertake projects which seek to advance science or technology by resolving scientific or technological uncertainties. This definition can deter people from claiming as they believe the bar for a qualifying project is higher than it is – in fact, any company undertaking new product or process development may qualify. If your company is paying technical people who are experts in their field, this can be another indicator that R&D takes place.

HOW DOES THIS APPLY TO THE GREEN ECONOMY? Where this can often be seen is in the context of developments driven by the green economy – for example, currently plastic consumption, and in particular single use plastic packaging, is a major concern for many. A company which seeks to develop alternative methods of packaging

which has the same functionality as the plastic packaging is likely to find they are trying to advance technology in that area, and facing technological challenges in doing so – suddenly they are in the realms of a qualifying R&D project. It could be trying to replace the plastic with a different material – or looking at using more easily recyclable plastic. Looking at more recyclable materials could also lead to a qualifying R&D project –

some retailers are exploring making clothing fabric from waste products such as nylon fishing nets and, again, using this different material to recreate an existing product is very likely to involve technical challenges with a view to achieving a technological advance. It’s not just new product development which might qualify – although it does

tend to be easier to spot in those cases – process development can also involve R&D projects. For example, if a company has to work to reduce water or fuel consumption in their production process, this can lead to R&D if the steps involved are challenging and lead to the development of new technology.

WHAT IT’S WORTH The relief offers a corporation tax saving of up to 24.7% of qualifying costs – which comprise staff costs, consumables and software used in the R&D project, among other items. For companies which are loss making, the relief is at a lower level but can be available as a payable tax credit, thus helping fund future developments.

OTHER ISSUES It’s worth noting there is a separate tax relief available for companies which have patents and while obtaining a patent can be a time consuming business, the Intellectual Property Office accelerates the examination of patent applications deemed to have an environmental benefit. We would recommend any company undertaking new development work has a chat with a patent attorney to ensure they aren’t missing out on commercial protection or tax relief.

business network April 2020 85

hit by another, coronavirus. As a country we have been

stockpiling, testing business continuity and generally getting ready for a rocky road ahead. And now, a bit earlier than expected, we have hit some rocks. But we - and others around the

world - have learned how to cope with a financial crash. Before, governments used quantitative easing. The only effect of that was to put money in the pockets of the institutions, not people with spending power. Now, we are seeing governments

use other stimuli. Our own Government unveiled a raft of measures in the Budget designed to put money in the pockets of individuals and help small businesses. In China, where the government has indicated it will stimulate the

economy, factories are re-opening and ports are open again. Once back in calmer waters, we

may find Brexit has benefits we didn’t foresee. Italy’s economy has crashed, just like Greece’s did. But as outsiders to the EU that is not our problem. In fact, we may benefit from the need to manufacture in the UK rather than import from Europe. And there are openings here in

the East Midlands. We have more power in the regions, with local enterprise partnerships, like D2N2, and devolution deals and mayors. We have fantastic opportunities for businesses and employment, such as the area around East Midlands Airport. And who knows, a weakened

Europe may give us a stronger hand in the Brexit talks. Uncertain times indeed, but all is not lost.

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