Key R&D tax takeaways from the Autumn Statement
Last week, the Chancellor Jeremy Hunt announced his ‘Budget for Growth’ with a number of key announcements. We take a look at the key takeaways for businesses claiming R&D tax relief.
The merger of the SME and RDEC schemes has now been confirmed with a start date of accounting periods starting from 1st April 2024. This will create a unified and simplified system under one set of rules.
Benefits to loss-making businesses
The new merged scheme will see a lowered tax rate for loss-making businesses. The current RDEC scheme sees notional tax at the main Corporation rate of 25% but under the new scheme this will be reduced to 19%.
There will still be two separate benefits despite the merged scheme. One is for small businesses that invest a lot in research and development (R&D), and it will continue. The change is that now, businesses spending 30% or more of their money on R&D can qualify for this benefit from April 1, 2024.
Even with these changes, there’s still an issue such as if a business spends a fifth of its money on R&D, which is a big commitment then it still will not be considered R&D intensive under the new plan.
The good news is that if a company falls below the 30% R&D spending, they have a year to get back on track. This helps avoid situations where businesses keep going in and out of the R&D scheme, making it hard to plan finances and investments.
Larger businesses will no longer be restricted on subsidised expenditure. Clarification is still needed on this point which we hope to hear about soon.
Contracted out R&D
The Government is still very much committed to increase the overall level of R&D in the UK economy in order to boost growth. As a result, any R&D tax relief claimed will be paid directly to the business making the decision on the R&D and carrying any risk. The downside to this decision is that any business that carries out R&D on behalf of a larger business will no longer be able to claim.
The consultation period on the R&D scheme has now ended, we hope this will now bring some stability for some time to enable businesses to claim this much needed relief.
Navigating the landscape of R&D tax credits and all the constant changes can be difficult. To ensure you are maximising the full potential of R&D tax credits it is worth discussing your claim with one of our experts.