The development of science, technology and new innovation in industry is encouraged through a programme of tax credits for qualifying research and development (R&D) activities for the regime is for all companies.
The R&D regimes are under continuous review and significant changes were introduced from April 2023 and beyond.
Companies should carefully consider whether their activities qualify for valuable R&D tax credit relief and take full advantage where it is available.
The rules and qualifying criteria for the R&D tax credit relief system, across all industries and sectors, can be complex in terms of identifying what projects qualify for relief. There are two different schemes, one for small and medium-sized enterprises (SMEs), and one for large companies. R&D tax relief is only applicable to companies undertaking qualifying R&D activities.
The main objectives of the recent R&D tax credit schemes review have been to ensure that:
Innovation and increasing investment in R&D are seen as important drivers of economic growth by the UK government. The R&D tax credit rules have been updated from 1 April 2023 with a few welcome changes, including relief to companies innovating in pure mathematics and incurring costs relating to cloud computing and data.
Some less-welcome measures have been delayed to April 2024, including proposed rules for externally provided worker (EPW) and subcontractor costs which, from that date, will largely only qualify if the work has been performed in the UK.
The following significant changes are aimed at targeting perceived abuse of the R&D tax credit regime and improving compliance:
In response to reports of widespread abuse, changes to the rates of relief for qualifying R&D spend incurred on or after 1 April 2023 have been introduced:
If you believe that your company is engaging in qualifying R&D activity and think you have grounds for a valid relief claim, please contact either:
Roger Wareham – Partner
Bournemouth
E: roger.wareham@saffery.com T: +44 (0)1202 204717
Sheryl Davis – Partner
High Wycombe
E: sheryl.davis@saffery.com T: +44 (0)1494 416080
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