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Research & Development Tax Relief
Changes from April 2023
How are the rates changing for SMEs?
The Autumn Statement 2022 and Spring Budget 2023 have made changes to the R&D scheme going forward. Businesses with expenditure from 1st April 2023, the additional deduction will decrease from 130% to 86% and the SME credit rate will reduce from 14.5% to 10%, except for loss-making SMEs that are R&D intensive.
Further to this, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%.
R&D scheme pre April 2023
If you complete Research and Development (R&D) activities in a Limited Company, you may be eligible for corporation tax relief or even a tax credit. Currently SMEs receive an additional 130% tax relief on qualifying expenditure, this could be worth between 25-33% of qualifying expenditure.
R&D is also available for large companies which exceed the SME threshold, under The Research and Development Expenditure Credit (RDEC) scheme which produces a tax benefit of around 11% of qualifying expenditure.
What counts as qualifying R&D activity?
- Creating new products, processes, or services.
- Changing or modifying an existing product, process or service.
- Undertaking research to further knowledge in a particular field of science or technology.
Qualifying costs
- Staff costs
- Sub-contractors
- Consumables
- Software
Working with you to fully understand what Research & Development activities you have undertaken during the year. Our professional advisors can identify the projects and costs relating to those activities to support the R&D tax relief claim with HMRC.
HMRC have very strict criteria to adhere to therefore we will complete the calculations, write the supporting report and submit the claim on a Corporation Tax Return (CT600).
If HMRC raises any queries on the claim, we will work closely with HMRC to ensure the claim is approved and relief received.
