A single R&D tax credit scheme

Published by Sandra Smith on

A single R&D tax credit scheme

HMRC proposed a consultation in January 2023 regarding the proposed merger of the SME R&D tax relief scheme and the RDEC scheme into a single R&D tax credit scheme. Following this the Government have published a draft legislation in order to simplify the scheme.

The draft legislation is now in an open technical consultation period which will end in September 2023 with a predicted announcement in the Autumn 2023 statement and a launch date of April 2024.

What’s included in the proposed R&D Tax scheme?

The main point is that the current two schemes will be merged into one single scheme. The plan is to implement a similar process to the RDEC scheme whereby the credit is granted as an expenditure credit (calculated as a percentage of the R&D expenditure). This credit can then be used against a company’s tax liability (or subject to some adjustment) paid in cash.

There will be some elements of the SME scheme incorporated into the new legislation such as the more generous version of the PAYE/NICs payable credit cap which is currently under the SME scheme.

The SME scheme approach to dealing with sub-contractors will be adopted allowing larger companies to benefit from claiming this cost back.

Benefits

By introducing one scheme to cover all should simplify the current process encouraging more businesses to make a claim and then invest further in future projects.

The new merged scheme will become a lot more simplified whilst driving innovation and growth in the UK.

With the R&D tax credit scheme continually evolving, it’s best to speak to an expert to ensure you are getting the most out of your claim.