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

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.