1-Apr-23: Changes to R&D tax relief

1st March 2023

From 1 April 2023 there are a few changes to the ‘super-generous’ R&D tax relief rules:

  • The Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%,
  • The SME additional deduction will decrease from 130% to 86% and the SME tax credit (surrender) rate will decrease from 14.5% to 10%.
  • Additional costs of datasets, cloud computing and pure mathematics may be allowable
  • Eligible subcontracted work will be limited to work undertaken in the UK
  • The cost for externally provided workers will only qualify if the service provider (or connected party) that paid them did so through the UK PAYE system.
  • Claims will need to name a senior company officer and any accountant/advisor will be identified
  • Companies will be required to inform HMRC of their intention to file a claim within 6 months of their year-end unless they have made a claim in the last 3 years
  • Digital claims will become mandatory.
  • Allowing companies to claim RDEC instead where they had previously erroneously claimed SME relief and the time limit for amending claims has expired.
  • Where a SME within a group moves from SME to RDEC scheme as a result of exceeding the size thresholds for a SME claim, all companies within the group will retain SME status for one year afterwards.

With effect from 1 August 2023:

  • All claims will be required to be made digitally, through an HMRC portal, potentially with additional information

These changes are partly aimed at clamping down on fraudulent claims – does your business currently receive cold calls from R&D ‘specialists’ promising you tax refunds without knowing anything about your circumstances?

Disclaimer - All information in this post was correct at time of writing.
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