The photonics industry sector covers a wide range of companies from systems integrators to optical design consultancies. Whether you are developing the next generation product or trying to find that innovative solution to achieve your clients’ challenging requirements, the likelihood is you will be undertaking research or development. The R&D activity in this sector is very high and most companies should be capable of benefiting from the R&D Tax Relief scheme. The up take of these financial incentives is very patchy, and where claims are being made they tend to focus solely on the activities of the R&D department or team. The scope of the R&D Tax Relief scheme can be much wider than this, and now is the time to review any claim or to start making a claim as the ability to retrospectively claim over the past six years will be reduced to two years after March 2008.

What is the benefit?
Research and Development tax incentives have been available to UK small and medium sized enterprises (SMEs) since 1 April 2000 and to large companies since 1 April 2002. The legislation provides for relief in three ways:

• For large companies, an additional tax deduction of 25% of the qualifying expenditure identified. This yields a £7.5k benefit for every £100k of revenue spend for a 30% taxpayer.
• For SMEs, an additional tax deduction of 50% of the qualifying expenditure identified. This yields an effective benefit of up to £15k for every £100k of revenue spend for a 30% taxpayer, with the option of a 24% cash refund for lossmaking companies who elect to surrender the benefit of the increased loss.
• 100% deduction for capital expenditure on R&D assets.

For further information, download our publication R&D opportunities in the high technology photonics industry. (PDF, 194KB)