As part of the 2025 Budget, the UK government plans to raise the limit for first-year reimbursements extended to businesses within the research and development (R & D) tax credit scheme. This initiative will undergo an in-depth examination in the next year. The scheme enables businesses engaging in research initiatives to reclaim up to a quarter of their total project costs either via cash or deduction from their corporation tax bill, paid out over a three-year period.
Since the 2024 Budget alteration, firms have been able to claim up to €50,000 in the first year, marking a significant increase from the initial €25,000 limit. Addressing the UK Parliament on Tuesday afternoon, UK Finance Minister, Jack Chambers indicated that the first-year limit is slated for an increase to €75,000 starting from the following year.
Chambers, a representative from Fianna Fáil, elaborated that the change is designed to provide supplementary cash-flow assistance to businesses embarking on smaller R & D projects or those interacting with the tax credit initiative for the first time.
Moreover, Chambers also guaranteed a thorough review of the current scheme in the ensuing year with the aim of ensuring that it continues to offer support to progressive businesses as they adapt and seize the occasions that a progressively digital world presents.
Ian Collins, EY Ireland’s Director of Innovation Incentives, praised the first-year limit raise as greatly advantageous for small and medium enterprises in the Republic.
Collins noted that as the battle for FDI and inward investment becomes more fierce globally, it’s important to have incentives in place that are fit for purpose. He also stated his belief that previous reviews of this sort have led to legislative enhancements aiming to maintain and increase Ireland’s appeal as a hotspot for R & D.
Chambers, in collaboration with Public Expenditure Minister, Paschal Donohoe, also presented several start-ups and established businesses with a collection of tax and expenditure aid.
The Coalition broadcasted a two-fold increase in the sum an investor can claim under the Employment Investment Incentive. The permissible amount has soared from €500,000 to €1 million. They also amplified the relief obtainable under the Start-Up Relief for Entrepreneurs, bumping it up from €700,000 to €980,000.
In another development, Mr Donohoe unveiled an energy subsidy initiative geared towards businesses within the hospitality and retail industries. The Fine Gael TD highlighted that this €170 million initiative is expected to bring assistance to an estimated 39,000 firms this coming winter. More updates are to be issued subsequently.