GOVERNMENT IMPLEMENTS CHANGES TO THE R&D TAX CREDIT SCHEME
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.
R and D Tax Specialists Limited
M: 07717 811547