NEWS

8 August 2023

As part of the last Autumn Statement, the government committed to increasing public expenditure on R&D to £20 billion per annum by 2024 to 2025. This represents a cash increase of around a third and is the largest ever increase in the public R&D budget over a Spending Review period.

As part of the latest reforms, the government confirmed that, for R&D Tax Credit claims for accounting periods from 1 April 2023, the small and medium enterprise (SME) additional deduction rate for R&D Tax Credit claims will reduce from 130% to 86%, and the SME payable credit rate will decrease from 14.5% to 10%.

At the same time, the rate for the Research and Development Expenditure Credit (RDEC), under which larger companies apply, will increase from 13% to 20%.

Improvements in the range of costs that can be claimed were also announced.  For example, cloud computing costs, including storage and data licence costs, can now be claimed.

Other important changes, effective from 8th August 2023, are as follows:

Advance Notification Process — For all new claims, and for companies that have not claimed for 3 years or more, for accounting periods commencing on, or after, 1 April 2023, HMRC will require the completion of a new online form notifying of a company’s intention to file an R&D Tax Credit claim.

Additional Information Form — For all claims submitted from 8 August 2023, HMRC have introduced a new requirement for companies to complete an additional on-line information form before their R&D claim, and associated Corporation Tax Return, are submitted.

Garry Hague, Managing Director of R and D Tax Specialists, commented: “The fundamentals of the scheme remain largely the same and it is still a very worthwhile source of funding for companies that are undertaking R&D work to develop their products, processes, or systems.

“These latest changes reflect a greater focus on ensuring compliance by HMRC and we welcome the additional rigour. We have reviewed the additional requirements in detail and, when we commence the claim process with our clients, we will discuss the changes with them to capture the additional information required in the most efficient way, and ensure that claims submitted meet HMRC’s enhanced criteria.”

We are happy to answer any questions that clients, or others, might have on the latest changes, or on the overall R&D Tax Credit scheme.

Please contact:

Garry Hague

Managing Director

R and D Tax Specialists Limited

M: 07717 811547

E: garry@randdtaxspecialists.co.uk

W: randdtaxspecialists.co.uk

29th November 2022

The government’s Autumn Statement revealed a number of upcoming changes to the R&D Tax Credit scheme. The key changes that were announced by the Chancellor included:

• All R&D claims will need to be submitted digitally to HMRC.
• The current SME relief uplift of 130% will decrease to 86%.
• The tax credit refund rate will be reduced from 14.5% to 10%.
• The RDEC scheme rate (larger companies) is going up from 13% to 20%.
• Overseas sub-contracting costs will not be allowed as qualifying expenditure.

Changes to the SME scheme were made largely in response to reports of abuse and fraud that have recently surfaced. The changes are expected to become effective for financial years commencing from April 2023.

In addition to these changes, the Chancellor said that, ahead of the next Budget, the government will work with industry to understand what further support R&D intensive SMEs may require. Earlier this year, in the spring statement, the government pledged an increase in R&D funding to £20bn by 2024/5.

Garry Hague, Managing Director of R and D Tax Specialists, commented: “It is obviously disappointing that alleged abuse of the scheme by a small minority has resulted in these changes to what is a very successful business support scheme.  In the short term, the changes will not affect any current claims, and will likely only come into play for financial periods occurring after 1^st April 2023.

“Whilst there will be a reduction in the size of claims following these changes, the scheme will continue to provide essential funding to businesses engaged in R&D work, and we implore companies to continue to claim.  At the same time, with HMRC’s focus on eliminating fraud in the scheme, we  encourage companies to partner with a bona fide specialist in the R&D Tax Credit scheme to ensure claims made are fully compliant with HMRC’s requirements and the law.

“With more than 10 years’ experience in the scheme, R and D Tax Specialists are happy to provide a no obligation assessment of a company’s validity to claim and we provide a complete end-to-end service for preparation and submission of claims.”

13 April 2022

Scotland has seen a boost in research and development spending and space jobs resulting in Scotland now accounting for a fifth of the UK space workforce industry.

The UK’s first vertical small satellite launches are set to take place from Scottish spaceports including the construction of a spaceport in the far north of Scotland in Shetland and a spaceport near Tongue in Sutherland.

The UK Space Agency said Scotland was “leading the way” in space sector growth.  It said spaceports were likely to lead to further jobs in the coming years, fuelled by the growth of regional space clusters, international investment, and emerging technologies.

UK Science Minister, George Freeman said the employment boost in the space sector was “promising in the face of global economic headwinds”. He said: “We’re backing this innovative and resilient industry through the largest ever increase to research and development spending, which includes a significant uplift to the UK Space Agency’s budget, and the delivery of the UK’s first National Space Strategy.”

https://www.bbc.co.uk/news/uk-scotland-scotland-business-61081756

10 April 2022

The UK’s aerospace technology research programme is set to receive record levels of government funding.

The UK’s Aerospace Technology Institute (ATI) is set to receive record levels of government funding. ATI is set to receive £685 million in funding over the next three years, from 2022 to 2025, which is an increase of over 50% from previous years.

This funding will drive forward the research and development of the green aviation technology industry by helping to capitalise on the UK’s world leading R&D system and support the development of xero-carbon and ultra-low-emission aircraft technology.

In addition to supporting the UK in advancing new green technology, the investment will also bring about the creation of tens of thousands of jobs.

Previous projects that have benefitted from this funding include ZeroAvia’s 6-seat hydrogen-electric aircraft as well as Roll’s-Royce’s UltraFan, the largest and most efficient aircraft engine ever.

R and D Tax Specialists have extensive experience working with clients within aerospace and green technology including…’project disciplines’

https://www.gov.uk/government/news/green-aerospace-tech-to-receive-record-government-funding

6 April 2022

Nearly half a million UK businesses will benefit from a tax cut worth up to £1,000 from April 2022.

The Chancellor, Rishi Sunak announced in the Spring statement that this tax cut will help half a million businesses thrive and grow to support economic recovery.

The Employment Allowance has risen from £4,000 to £5,000 allowing small companies the ability to claim up to £5,000 of their National Insurance Contributions (NICs) bills.

94% of businesses benefitting from the £1,000 increase are small micro businesses in scientific and technical activities industries, construction sector and wholesale and retail.

The Employment Allowance change is just one of a number of measures on offer to spur business growth, including the tax regime for innovation. The government aims to ensure the R&D Tax Credit Scheme is globally competitive and properly incentivises higher business investment in R&D, with further plans to be set out in the Autumn.

https://www.gov.uk/government/news/tax-cut-worth-up-to-1000-for-half-a-million-small-businesses-starts-today

5th April 2022

In April 2022, R and D Tax Specialists’ Alex Lawson ran the Paris Marathon in aide of Unite Against Cancer (UAC). The charity was founded by a close friend in 2012, inspired by Christopher Smith who passed away, after a 2-year battle with osteosarcoma at the age of just 17.

Osteosarcoma is a rare type of cancer that affects bone and is more common in older children and teenagers; the causes for this particular type of cancer are poorly understood.

UAC is a Scottish registered charity that raises money to support individuals fighting cancer, fund research into new cancer treatments, raise awareness of this rare cancer type and promote strategies for cancer prevention.

The funds raised by Alex in his effort to complete the marathon will contribute towards training cancer scientists. ‘The Christopher Douglas Smith Postgraduate scholarship’, founded by UAC, provides a fully funded scholarship for the Masters in Cancer sciences postgraduate programme at the University of Glasgow. The programme enables students to work within a multidisciplinary environment of world-leading scientists and cancer specialists to address the latest challenges in cancer diagnosis, research, and treatment.

For more information on the charity and the work done at the University of Glasgow please visit: www.uniteagainstcancer.org or if you want to support Alex in fund-raising you can at: https://www.justgiving.com/fundraising/alex-lawson4

29th March 2022

In a further boost to R&D funding, the UK government has announced a £39.8 billion R&D budget for 2022 – 2025, the largest research and development budget the UK has seen to date.

The budget is to be allocated across the Department for Business, Energy, and Industrial Strategy (BEIS) with R&D spending set to increase by £5 billion to £20 billion per annum by 2024/2025. This is a 33% increase which will fast track UK research and development.

The investment will see a boost across R&D related industry sectors throughout the UK, including a boost in public R&D investment outside the greater South-East. These regions are set to receive at least 55% of the BEIS R&D budget by 2024/2025.

The government’s R&D investment plans, combined with its R&D Tax Credit scheme, will further support businesses investing in innovation and technical development. Research shows that every £1 of public expenditure in R&D eventually leverages an average of £2 of additional private investment.

https://www.gov.uk/government/news/government-announces-plans-for-largest-ever-rd-budget

24th March 2022

In the Chancellor’s 2022 Spring Statement, Rishi Sunak responded to feedback in relation to the proposed changes to R&D tax relief, indicating that the scope of R&D is to set to expand to cover data and cloud computing costs. More specifically the Chancellor outlined that all cloud costs which facilitate R&D activities, including storage, will become eligible in 2023.

This will also cover dataset licence payments for any qualifying R&D project, staffing costs to collect, cleanse and analyse data for R&D, as well as attributed software costs. Additionally, pure mathematics will also be covered.

The prospect of restrictions on overseas R&D will go ahead in 2023; however, the government stated it is aware there are cases that require R&D to occur overseas and acknowledged key exceptions where it is necessary for R&D activity to be completed outside the UK. This includes material factors for research subjects located outwith the UK and instances where R&D activities are required to take place outside the UK for legal reasons.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1062486/Spring_Statement_2022_Web_Accessible.pdf

18th October 2021

Latest statistics show that Scottish SMEs are missing out on thousands of pounds of unclaimed research and development tax credits.

Many businesses are unaware that they are eligible for this funding, which can be claimed against spending on research and development in a wide range of areas.

According to government figures published in October 2021, 85,900 R&D tax credit claims were made across the UK, of which less than 5,000 were from Scotland.

R&D claims are mostly concentrated in companies with a registered office in London, the South-East, or the East of England, with these three regions making up 46% of the total number of claims, with just 5% contributed from Scotland.

Scottish-based companies involved in technical development activities are encouraged to contact R and D Tax Specialists for a no-obligation assessment of their potential to make a claim.

https://www.insider.co.uk/news/scottish-smes-missing-out-thousands-21939733

4th October 2021

Transport Minister Trudy Harrison has announced that industry entrepreneurs and innovators pioneering new ways of creating a better transport system will see their ideas brought to life thanks to government funding.

Up to 53 projects will be awarded a share of £1.95 million in Department for Transport funding. Past winners include a purifying system to lower virus transmission on trains, a portable charger for use at remote locations, and a battery cooling system.

Transport Minister Trudy Harrison said:

“Backing innovation is a priority for us and I’m delighted to be supporting Britain’s entrepreneurs, as they help us to ensure people can travel at ease and to solve the complex task of decarbonising our transport system.”

“This is vital as we look ahead to a greener and safer transport future that will create jobs right across the UK.”

The government-backed projects will put the UK on the road to a greener transport future, supporting innovation, particularly ahead of COP26 taking place in the Autumn of 2021 in Glasgow.

https://www.gov.uk/government/news/nearly-2-million-to-be-given-to-tech-start-ups-to-power-up-the-transport-revolution