Research and development relief (R&D) has been the talk of the town, especially since the reform bombshell of the 2022 Autumn Statement.  The current eight-week consultation points towards further reform, considering the case for a single and more manageable R&D scheme.

What are the confirmed R&D changes for 1 April 2023

  • SME rate reduces from 130% to 86%
  • SME tax credit rate reduces from 14.5% to 10%
  • Large company/R&D Expenditure Credit rate (RDEC) increases from 13% to 20%

Changes to accounting periods from 1 April 2023

  • Disallowance of overseas costs such as non-UK agency workers or subcontractors
  • New measures to combat abuse
  • Inclusion of data and cloud computing costs

The consultation

Consideration is being given to combine the current R&D tax regimes – the Research and Development Expenditure Credit (RDEC) and the small and medium enterprises (SME) R&D relief – into a single, RDEC-like, scheme. If merged, the expected rollout will be for accounting periods from 1 April 2024.

Other areas of discussion include managing subcontracting costs, an introduction of a PAYE/NIC cap and a minimal threshold to combat systematic abuse.

If you are concerned with how these changes might impact on future R&D claims, feel free to contact our team.

The Team

Our experienced and approachable team are on-hand to assist you, please get in touch below: