What are Fiscal Incentives?
Fiscal Incentives are government policy tools aimed at supporting business and promoting economic growth and investment in targeted markets and technologies such as those that promote manufacturing, regeneration and research & development activities. The three primary sources of direct tax relief for property and development expenditure in the UK are Land Remediation Relief and Capital Allowances for site preparation and build costs and Research & Development tax relief on the costs typically incurred by engineering and construction companies in delivering complex projects.
Capital Allowances provide an allowable deduction in calculating the taxable profits from business activities. The three primary allowances applicable to property owners, occupiers and developers are Plant & Machinery Allowances, Structures and Buildings Allowances and Research & Development Allowances. Capital allowances are not available on expenditure incurred on the acquisition of land or for assets used in dwellings.
Incentives for Research & Development were introduced in 2000 for SMEs and extended to large companies in 2002. The current UK R&D tax reliefs, with their core in CTA2009 Part 13, are now amongst the most generous in the world and yet many companies still fail to claim, particularly in the engineering and construction sector.