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R&D Tax Reliefs Consultation on a single scheme – Let us be your voice

On the 1st of January 2023, the Government launched a new consultation surrounding further changes to the R&D Tax Relief schemes, intending to merge the existing two into a single R&D Tax Relief scheme from the 1st of April 2024.

Currently, there are two R&D tax relief regimes available:

  • Small and Medium Enterprises (SME) scheme: An additional deduction of 86% (from 01/04/2023) for qualifying R&D costs. For loss-makers, this deduction can be surrendered for a 10% tax credit (from 01/04/2023).
  • The Research and Development Expenditure Credit (RDEC) scheme: A taxable ‘above the line’ 20% credit (from 01/04/2023) on qualifying R&D costs. This is for large companies, SMEs that are not eligible under the SME scheme, those with grant funding or those that have carried out R&D work for larger companies.

This consultation is looking at five key areas: 

  1. Subcontracted R&D activity - should a single set of rules be adopted? Should these be the existing SME or RDEC rules or an alternative model?
  2.  Cap - currently, there is a cap on payable credits under both (RDEC and SME) schemes. Which should remain in place?
  3. Implementation - considering the upcoming changes that will be in place from 01/04/2023, is 01/04/2024 too early to implement a single R&D Tax Relief scheme?
  4. The inclusion of Qualifying Indirect Activities (QIAs) – should these remain or be removed?
  5. Minimum eligibility spends –should a minimum spend be re-introduced?

Should the single scheme be adopted, we believe small to medium-sized businesses (SMEs) will be the most impacted.

If you are claiming R&D, either via RIFT or independently, let us be your voice within our response to the Consultation and proposed single scheme. RIFT is preparing a formal response on behalf of our client base (as expected by HMRC), we are happy to extend this response to any SME claiming R&D that wishes for their opinion to be heard and acknowledged.

If you would like to respond in conjunction with RIFT R&D, please get in touch with us here before midday on the 13th of March 2023.

If you would like to respond directly to HMRC, please click here.