Budget 2008

Introduction

Alistair Darling presented his first Budget on Wednesday 12 March 2008. The Chancellor stated that there will be no recession although he conceded that growth up to 2010 will be less than previously forecast. Borrowing will go up as a result.

Our report also included details of a number of recent announcements from HMRC.

Changes to income tax rates

From 6 April 2008 the following changes will apply:

• the existing 10% starting rate is abolished 
• a new 10% starting rate for savings income only is introduced, with a limit of £2,320. If an individual’s non-savings income is above this limit then the 10% savings rate will not be applicable
• the basic rate band is reduced to 20%, down from 22%.

Self assessment procedures for individuals
Changes to the self assessment procedures for individuals.

Self assessment procedures for individuals

HMRC has already announced a number of changes that will simplify the self-assessment procedures for individuals:

• For 2007/08 there will be a shorter form of the self-employment pages for businesses with turnovers below the 2007/08 VAT threshold, £64,000.
• Also beginning 2007/08 there will be a facility within the shorter self-employment form for businesses with turnover below £30,000 (up from £15,000) to complete a three line account.
• The payment on account threshold will be doubled to £1,000 from April 2009. The first payments on account affected will be those due on 31 January 2010 and 31 July 2010.
• HMRC is consulting on a proposal to remove the £8,500 threshold at which benefits in kind become taxable and on how best to collect tax on benefits in kind and expenses through the payroll. It is anticipated that the earliest that the changes could be brought in is April 2011.

Inheritance tax changes

Changes to the trust regime which were announced in the Finance Act 2006 will take effect from 6 April 2008.  Discretionary trusts remain unaffected by the changes; there is a charge on creation of the trust, a charge on the ten year anniversary and a charge on capital distributed from the trust.

Interest in possession trusts already in existence will continue to be taxed under the current regime during the life tenant’s lifetime.

Accumulation and maintenance (A&M) trusts will be taxed in the same way as discretionary trusts. It will no longer be possible to gain exemption from inheritance tax on the creation of an A&M trust.

What should be done to mitigate the effects of these changes? Insurance is a possibility, or changing the structure of investments, so that 100% Business Asset relief is available. AIM listed investments or funds would fulfil these requirements.

The often overlooked relief for regular gifts out of income could be used. This has no limit, provided that the donor’s standard of living is not affected and the gift comes out of income and not capital.

Also excepted is the availability of the deceased spouse’s nil rate band to the extent that it remains unused, on the death of the surviving spouse.

Example:
Hannah dies in May 2008, leaving an estate of £800,000. Louis, her husband, died in March 2003, leaving his estate of £125,000 to his children.

Hannah’s estate will have the benefit of her own nil rate band for 2008-09 of £312,000. In addition, she will have the benefit of the unused portion of the nil rate band available when Louis died. The band then was £250,000 of which his estate used 50%. Hannah’s estate will thus have the benefit of 50% of £312,000 i.e. £156,000 in respect of her late husband’s death.

Tax returns – all you need to know

Everything you need to know about impending changes to the tax return regime.

Everything you need to know about impending changes to the tax return regime. One of the key recommendations of the Carter Review was to encourage online filing for tax returns from 5 April 2008.

It recommended that:

• substitute returns (the computer generated copy returns which are produced by agents and sent to their clients for signature) should be stopped
• the moving forward of the tax return filing date from 31 January to the previous 31 October, for paper returns.

To this end from April 2008 substitute returns will not be accepted for the following:

• individual returns SA100
• partnership returns SA800
• trust returns SA900.

However, substitute returns will be allowed for:

• repayment claims R40
• trustees of registered pension scheme returns and SA970
• non-resident companies liable to income tax form SA700.

Indirect tax 

VAT

Registration
VAT registration threshold is set to increase to £67,000 (previously £64,000) effective from 1 April 2008. The corresponding deregistration limit will increase to £65,000 (previously £62,000). There have been no threshold changes announced to the Cash Account Scheme and Annual Accounting Scheme (remaining at £1,350,000) nor the Flat Rate Schemes (remaining at £150,000). Details included in HMRC’s Budget Notice 73.

Tax simplification
A review to simplify the VAT rules and administration is taking place, focusing on five key areas:

• ‘option to tax’
• partial exemption (including capital good scheme)
• frequency of return submissions
• VAT retail schemes
• complexities requiring simplification at the EU level.

HMRC has produced a review document called Tax Simplification Review that provides further details.

Transfers of going concern
HMRC is consulting on simplifying the Transfer of a Going Concern (TOGC) regime. Although there are no wholesale changes to legislation, the consultation is more focused on the service provided by HMRC and looking at areas of improvement.

Voluntary disclosure
The voluntary disclosure threshold is set to increase from £2,000 to the greater of £10,000 or 1% of turnover, capped to £50,000. This is of significant benefit to businesses as it will reduce some of the administrative burdens associated with the correction of VAT errors. The new threshold will allow businesses to adjust for errors via the VAT return. This new limit will also apply to other areas of indirect tax, for further details please see HMRC’s Budget Notice 75.

Fuel scale charge
Changes to fuel scale will come into effect from 1 May 2008, details can be found in HMRC’s Budget Notice 76. The changes maintain the alignment with direct tax levels.

Staff hire concession
The staff hire concession is due to be withdrawn from 1 April 2009, VAT will need to be charged on the whole charge made for the provision of staff. This will be a significant increase to business that hire staff as previously VAT was charged only on the excess over an employees wages. HMRC has produced a document Impact Assessment of the withdrawal of the VAT: Staff Hire Concession.

Three year cap
HMRC has produced guidance following the The House of Lords ruling in the landmark VAT refund case, Condé Nast Publications Limited. The decision challenged the manner in which the three year cap was introduced by HM Revenue & Customs (HMRC). HMRC has issued Business Brief 07/08, providing advice to businesses wishing to make a claim for overpaid VAT. Included within HMRC's Budget Notice 78 are details allowing businesses to submit claims, effectively introducing a transitional period up to 31 March 2009. In addition, HMRC has extended its powers to claw back incorrect claims made by businesses. 

Potentially this decision affects most businesses, particularly those that have had claims for overpaid VAT rejected due to the three year cap. In addition, businesses that have held back making a claim due to the three year cap should now consider submitting a claim before 31 March 2009.

Property
Previously announced, effective from 1 January 2008, the time limit a property must be empty to apply the 5% reduced on renovation work on residential property reduces to two years (previously three years).

Measures to simply the Option to Tax legislation are in place, effective from 1 June 2008, HMRC’s Budget Notice 79 provides further details.

Products designed to help people stop smoking
The reduced VAT rate of 5% will be applicable to products to help smokers quit, effective from 1 July 2008. These relate to ‘over the counter’ products, with those dispensed on a prescription remaining zero-rated. Details included in HMRC’s Budget Notice 77.

Fund managers
Extension of VAT exemption to be extended to Fund managers and providers of fund administration services, details included in HMRC’s Budget Notice 74.

Air passenger duty
This is at the consultancy stage, with proposals being made to levy this tax on a per flight basis rather than the current per passenger rate. Any changes are anticipated to be in force by 1 November 2009 and will be called Aviation Duty.

Alcohol duty
An above-inflation increase alcohol duty was always on the cards to discourage heavy drinking, a social issue which concerns Government policy makers. This is an example of taxation to influence behaviour and deter binge drinking. Details included in HMRC’s Budget Notice 91.

Restrictions on trade loss relief for individuals

The restriction is to sideways loss relief that can be claimed by an individual (not a partner), carrying on a trade in a non-active capacity.

Previously, a person sustaining a loss in a trade could set off the loss against other income; this is known as sideways loss relief.

From 6 April, where a loss arises to an individual carrying on a trade in a non-active capacity, as a result of tax avoidance arrangements made on or after 12 March 2008, there will be no sideways loss relief available for that loss.

Otherwise there will be an annual limit of £25,000 on the total amount of sideways loss relief that an individual may claim from trades carried on in a non-active capacity.

A non-active individual is someone other than a partner who spends less than ten hours a week, in a relevant period, personally engaged in activities of the trade "carried on commercially and with a view to the realisation of profits from those activities".

Losses from qualifying film expenditure (ss137-140 ITTOIA 2005) and from Lloyds underwriting business are exempt from the restrictions

Changes to the taxation of non-domiciled individuals

Currently, individuals who are not domiciled in the UK receive exemptions from UK tax in respect of their non-UK income and gains. Such income and gains are not normally charged to UK tax unless they are remitted here (the remittance basis).

Domicile in this context means a place that the individual regards as their permanent home – to which they will ultimately return. Inheritance tax has a concept of deemed domicile, which applies where an individual who has been tax resident in the UK for 17 out of the last 20 years; this deemed domicile does not apply to taxes other than inheritance tax.

There has been much criticism of this perceived unfairness and the Chancellor has come up with the following proposals:

• Non-domiciled and/or not ordinarily resident individuals who have been in the UK for more than seven out of the past ten years will only be able to use the remittance basis after making an annual payment of £30,000. Money brought in to pay the charge will not itself be taxed, provided the payment is made direct to HMRC and not passed through the taxpayer’s UK business account. However, if the £30,000 is repaid, it becomes a taxable remittance at that point. The £30,000 charge is in addition to any tax due on remittances. Individuals paying the charge on unremitted income or gains can choose on which income or gains it is charged and these will not be charged again when remitted.
• Those whose unremitted overseas income and gains are less than £2,000 will be exempt from the £30,000 charge, as are individuals under the age of 18.
• Individuals will have to make a claim to use the remittance basis and the personal reliefs and CGT annual allowance will not be available to them, even if they have been UK resident for less than seven years. HMRC will not regard a decision not to make a claim in any one year as evidence of a change of domicile.
• Those using the remittance basis will not have to make further disclosures about their income and gains arising abroad. The income or gains will be taxed irrespective of the year in which it is remitted.
• BN105 makes it clear that works of art lent for public display would be exempt from a charge to tax.
• Remittances of gains from offshore trusts will become taxable in the UK. Trustees will be able to make an irrevocable election to rebase assets held as at 6 April 2008 to exclude any part of a chargeable gain relating to a period prior to that date.
• Settlors and beneficiaries of offshore trusts will not be required to give further information about the trust assets or trustees provided they have made a correct return of their liabilities.
• Legislation will be amended so that where the remittance basis has been claimed for a year, income of that year will be liable to tax if remitted, even where the source of the income has ceased in a previous year. Currently, foreign income remitted to the UK can only be taxed if brought into the UK as cash. It has been known for remittances to be converted into non-cash assets to avoid the charge. New legislation will enable money, property and services derived from foreign income to be treated as remittances when brought into the UK. There will be exemptions for personal effects, assets costing less than £1,000, assets brought in for repair and assets owned on 11 March 2008. Current rules for employment income and capital gains already tax assets bought into the UK where purchased out of untaxed foreign income or gains; these rules are unchanged.
• Residence rules are to be amended so that a day when the individual is in the UK at midnight counts as a day in the UK for residence purposes.
• It is not intended that transit passengers should be resident for the day they pass through the UK, unless they do any work e.g. a business meeting on that day. It may be advisable to keep evidence of intention or delays etc.
• It is not intended that the charge should apply to those taxpayers who are treated as resident in another territory by virtue of a double tax agreement.
• Changes to the taxation of gains from offshore trusts will not apply to gains accrued before 6 April 2008.
• The remittance basis is to apply to remittances of trust gains to UK resident beneficiaries. Such gains which are matched with remittances after 5 April 2008 will retain the benefit of taper relief available when the gains were realised.
• The remittance basis will also apply to offshore gains under the above and under transfer of asset abroad provisions.
• If a foreign gain is realised, any remittance will be primarily deemed to be gain, until the gain is exhausted. 
• Where foreign income or gains is used to service interest-only foreign loans used in the UK, that will constitute a taxable remittance.

Assets already in the UK that were purchased with foreign investment income will not give rise to a remittance charge.

• Losses on overseas assets are to be available to non-domiciled individuals who do not claim the remittance basis.

The additional charge is to be administered through the self assessment system. Non-domiciled individuals who have been resident in the UK for seven years will therefore have to register with the tax authorities, even though there would otherwise have been no reason to do so.

These rules are controversial as the Government must balance the possible loss of business due to an outflow of business carried on by foreign domiciled individuals against fairness in the taxation of UK residents

Capital gains tax

The long anticipated changes to Capital Gains Tax will be effective from 6 April 2008. As previously detailed by the Chancellor the changes will apply to individuals and trustees only; corporation tax on chargeable gains will be unaffected. Capital Gains will now be subject to a rate of 18% with an Entrepreneurs’ relief available in certain circumstances. In order to qualify for the relief the following conditions must apply:

• the Entrepreneurs’ relief is available on the first £1,000,000 of a gain and is a lifetime allowance
• the gain is made on the part or full disposal of a trading business (including professions, vocations, furnished holiday lettings but not other property letting businesses)
• the relief is available to the disposal of shares/securities in a trading business provided the disposal is by an employee/officer of the business and the individual owns at least 5% of the voting rights in the business
• the business or appropriate shares/securities have been held for a minimum of one year
• unquoted businesses not exceeding £1m will be taxed at 10%, subject to prior use of the lifetime allowance
• gains in excess of £1,000,000 will be taxed at 18%.

The effect of the Entrepreneurs’ relief is to tax gains under £1,000,000 at an effective rate of 10%. To qualify for the relief the disposal will have to of a material business asset.

In addition to these changes, others previously announced were:

• the capital gains tax annual allowance for the 08/09 will be £9,600
• taper relief and indexation relief will be abolished 
• all gains will be taxed at 18%, except for gains mentioned above attracting the Entrepreneurs’ relief.

HMRC has provided guidance in respect of deferred gains, assets disposed of prior to 5 April 2008 with elements deferred after this date. These assets will be eligible for the Entrepreneurs relief, as long as it qualifies for the relief. There will also be a looking through of trust when applying the lifetime relief. Trustees must make claims for the relief jointly for a ‘qualifying beneficiary’. In addition, the lifetime of the beneficiary will reduce with any relief given through the trust.

For further details please see HMRC’s Budget Notice 48.

Other changes to Capital Gains Tax
For assets held at 31 March 1982, it now becomes compulsory to rebase the cost to a 31 March 1982 value, known as the ‘kink test’. Also removing of the ‘halving relief’ and simplification of pooling of ‘fungible’ assets, such as shares.

None of these changes are to be applied to companies and indexation allowance will still remain for companies.

Transport benefits

Previously announced changes to car benefit and car fuel benefit come into effect from 6 April 2008 i.e. tax year 2008/09. HMRC has also issued clarification on the tax and NIC position in respect of home to work travel costs and specifically the use of late night taxis.

Car benefit
The car benefit charge for a full year is obtained by multiplying the price of the car for tax purposes (in most cases, its list price plus accessories minus contributions) by the ‘appropriate percentage’. From 2008/09 the rules for calculating the ‘appropriate percentage’ change in three ways:

• the lower threshold, the appropriate CO2 emissions figure which determines the ‘appropriate percentage’ for all cars, is reduced from 140 to 135
• a new ‘10% band’ is introduced for cars with CO2 emissions figure of exactly 120 g/km or lower, the normal rounding does not apply to this figure. Such cars are called ‘qualifying low emissions cars’ (QUALECs). Diesel adjustments apply to QUALECs, as to all other cars, but no other reduction, which is available on other cars, applies to QUALECs. As a result, the only figures for the appropriate percentage for QUALECs are 13% – cars to which the diesel supplement applies, and 10% - all other cars
• electric-only cars are excluded from these arrangements and retain their 9% band
• there is a new 2% reduction for cars manufactured to run on E85 fuel, a mixture of 85% bio-ethanol and 15% unleaded petrol. They will be known as type G on forms P46(car) and P11D.

Car fuel benefit
Where an employee receives fuel for a car by reason of their employment, the cash equivalent of the benefit of the fuel is treated as earnings from employment and is subject to tax and national insurance contributions.

The cash equivalent of the benefit is calculated by applying the ‘appropriate percentage’ (calculated by reference to the CO2 emissions of a car) to the figure of £16,900, up from £14,400.

Van fuel benefit rules
Legislation is to be introduced to ensure that, where employees have been provided with a company van which is available for their private use, and who purchase fuel for business travel which is then reimbursed by their employer, such reimbursement of business fuel cost, and incidental private fuel, is not treated as earnings for tax purposes and that the same rules shall have effect for the provision of van fuel for private use as those that currently have effect for company car fuel.

This measure will be effective from the date the Finance Bill 2008 receives Royal Assent.

Late night travel
HMRC has issued clarification on the tax and NIC position in respect of home to work travel costs. It highlights late working and the use of a taxi. The cost of taxi journeys will not be assessable as a benefit in kind only if all the following conditions are met:

• the employee is required to work later than usual and until at least 9 pm
• this occurs irregularly; and
• by the time the employee ceases work
  o either public transport has ceased, or
  o it would not be reasonable to expect the employee to use public transport
• AND the number of occasions in the tax year on which a taxi is provided is no more than 60.

For the exemption to apply all the above conditions must be satisfied on each occasion an employee is provided with a taxi for a journey from work to home.

Capital allowances: summary

The Capital Allowances regime faces many changes as a result of the 2008 budget.

The main changes, already announced in the Pre-Budget Report, are:

• introduction of Annual Investment Allowance (AIA) of £50,000
• scrapping of first year allowances (FYA)
• reduction in writing down allowance (WDA) from 25% to 20%
• new WDA of 10% for 'integral features'
• phasing out of Industrial Buildings Allowances (IBA) and Agricultural Buildings Allowances (ABA)
• increase in WDA for long life assets from 6% to 10%
• small plant and machinery pools WDA of £1,000
• changes in treatment of low emission cars 
• repealing of fire safety capital allowances
• changes to the enhanced capital allowances regime (measures to protect the environment).

Changes to corporation tax rates

The main rate of corporation tax for companies with profits in excess of £1,500,000 will be reduced from 30% to 28% with effect from 1 April 2008.

The corporation tax small companies’ rate, available for companies with profits below £300,000, will be increased from 20% to 21% with effect from 1 April 2008.

The marginal relief fraction used to reduce the tax charge for companies with profits between £300,000 and £1,500,000 will change from 1/40 to 7/400 with effect from 1 April 2008.

Transitional relief on Gift Aid donations

Transitional relief supplements will be paid to charities and Community Amateur Sports Clubs (CASCs) to reduce the effect on them of the cut in basic rate tax from 22% to 20%, which would reduce the amount of tax that they could reclaim on Gift Aid donations. Transitional relief will be available in respect of qualifying Gift Aid donations made in the tax years 2008-09 to 2010-2011 inclusive.

The effect will be that charities and CASCs will continue to be able to make Gift Aid claims at the 22% rate in respect of donations made in the period 6 April 2008 to 5 April 2011

EIS

The amount of EIS income tax relief has increased from £400,000 to £500,000, encouraging investment in appropriate schemes. However, investment in shipbuilding and coal and steel production will no longer qualify for this relief nor for CVS and VCT reliefs. Further details can be found in HMRC’s Budget Notice 16.

As with EIS, the individual employee limit for EMI options has increased from £100,000 to £120,000. To qualify for EMI, a company has to have fewer than 250 employees. Further details can be found in HMRC’s Budget Notice 18.

Associated companies

Associated companies rules as they apply to small companies’ rate of corporation tax are to be changed with effect from 1 April 2008.

A company is an ‘associated company’ of another for this purpose if one of the two has ‘control’ of the other or both are under the control of the same person or persons. ‘Control’ is defined in ICTA 1988, s 416:

“The ability to exercise or to acquire control, whether direct or indirect, over the company’s affairs. It includes the possession of, or right to acquire:

(a) the greater part of the share capital or issued share capital; or
(b) the greater part of the voting power; or
(c) so much of the issued share capital as would give the right to receive the greater part of the company’s income, were all that income distributed; or
(d) rights to the greater part of the company’s assets in a distribution on a winding-up or in any other circumstances.

The definition of ‘control’ will be amended to ensure that the rights or powers held by business partners will be attributed only when ‘relevant tax planning arrangements have at any time had effect in respect of the taxpayer company’.  ‘Relevant tax planning arrangements’ will be defined as arrangements which involve the shareholder or director and the partner and secure a tax advantage by virtue of greater relief under section 13 of ICTA 1988.

Proposed new legislation to deal with the tax consequences of a change of employment status

Following discussions with the profession on a legislative solution to the issues highlighted in ‘Demibourne’,

Introduction
The Special Commissioner’s decision in the case of Demibourne Ltd v Revenue and Customs Commissioners highlighted a number of tax issues for employers and their employees which can arise as a consequence of a recategorisation of employment status. These issues relate to a situation where income tax and National Insurance contributions (NICs) has been paid in relation to the re-categorised income, but by the wrong legal person.

The Demibourne case confirmed that where an employment relationship exists, the employer is responsible for deducting tax from payments made to the employee in accordance with the PAYE regulations and HMRC does not have the discretion to choose whether to collect tax from the employer or the employee. This can lead to a situation where HMRC is obliged to seek recovery of PAYE tax and NICs in relation to income from the employer on which tax has previously been paid by (or on behalf of) the employee under self assessment.

Over recent months HMRC has engaged with the main bodies of the tax and accountancy profession and business to identify a solution to the issues highlighted in the Demibourne case. As a consequence of this dialogue a legislative solution is being proposed. HMRC is now discussing this with a wider group of key stakeholders representing the tax and accountancy professions, employer groups and individuals.

Proposed legislative changes
The proposed solution will require an amendment to the PAYE regulations to extend the limited circumstances in which HMRC can make a direction to transfer a PAYE liability from an employer to an employee. This new authority to make such a direction will apply where:

(a) the employee has received relevant payments (including notional payments) in relation to which the employer is required to deduct or account for tax in accordance with the PAYE regulations.
(b) the amount of tax which the employer was required to deduct or account for in accordance with the PAYE regulations in relation to the relevant payments exceeds the amount of tax actually deducted or accounted for, and
(c) HMRC considers that a liability to tax has been assessed on the income in question a self assessment made on or behalf of the employee; or where a self assessment has not yet been made but HMRC considers that income tax has been paid in relation to the income in question as a self assessment payment on account or as a sub-contractor deduction.

It is proposed that the following rules will apply in relation to any direction made under the new authority:

• the amount specified in a direction issued to the employee will be restricted to the amount of income tax that HMRC considers has been assessed or paid by (or on behalf of) the employee under (c) above
• the amount of tax determined by HMRC under regulation 80 of the PAYE regulations as unpaid tax payable by the employer will not include any tax specified in a direction for the year in question
• the employee’s entitlement to a ‘PAYE credit’ under regulation 185 of the PAYE regulations for tax not deducted/accounted for by the employer will be exclusive of any amount specified in a direction for the year(s) in question.

In practice this will produce the following outcomes for the worker and employer respectively:

• (for the employee) the employee’s self assessment for the year(s) in question will remain undisturbed. The tax already assessed in accordance with the self assessment will equal the transferred PAYE liability. Where a direction is made in relation to tax paid as a payment on account of tax payable under self assessment, the employee’s entitlement to include a PAYE credit in the self assessment for that year will be reduced by the amount of tax specified in the direction.
• (for the employer) the employer will be relieved of PAYE liability otherwise due under the PAYE regulations to the extent of the amount (or combined amounts) of tax specified in a direction to an employee(s) for the year(s) in question. However, the employer will remain liable for any PAYE tax in excess of the amount(s) directed to employees along with interest and any penalties.

National Insurance contributions
There are no corresponding amendments required to the National Insurance contributions regulations as HMRC already has legal authority to off-set wrongly paid Class 2 and 4 contributions against Class 1 (employee) contributions properly payable.

Implementation timetable
HMRC is currently developing amended regulations to give effect to the proposed solution with a view to making and laying a Statutory Instrument to come into force on 6 April 2008 or as soon as possible thereafter.

Transitional relief on Gift Aid donations

Transitional relief supplements will be paid to charities and Community Amateur Sports Clubs (CASCs) to reduce the effect on them of the cut in basic rate tax from 22% to 20%, which would reduce the amount of tax that they could reclaim on Gift Aid donations. Transitional relief will be available in respect of qualifying Gift Aid donations made in the tax years 2008-09 to 2010-2011 inclusive.

The effect will be that charities and CASCs will continue to be able to make Gift Aid claims at the 22% rate in respect of donations made in the period 6 April 2008 to 5 April 2011.

Increase in home working exemption

HMRC has announced that it will increase the tax and NIC free guideline rate employers can pay home working employees without keeping records from £2 to £3 per week with effect from 6 April 2008.

This does not prevent an employee being paid more but records will need to be kept of the expenses incurred

Research & development relief

There are changes to the Research & Development (R&D) relief for SMEs, though the date this will come into force is yet to be announced.

The rate of relief available for SMEs will increase to 175% (previously 150%) capped at €7.5 million per R&D project.

Other amendments, to be able to claim R&D relief, the most recent accounts have to be prepared on a ‘going concern’ basis; this applies to all companies wishing to claim the relief.

The large companies R&D relief also increases to 130% from 125%, this comes into effect 1 April 2008.