R&D tax changes – will you be a winner or loser?

Currently HMRC is undertaking a consultation process regarding the potential options to simplify the UK’s R&D regime.

By Mathew Browne, Senior Tax Manager

Proposals are that the existing RDEC and the SME reliefs would be replaced, potentially with effect from 1 April 2024 (according to the Treasury). Going forwards only a single R&D scheme based on the research and development expenditure credit (RDEC) would be available to be claimed.

Please note this is not prescribed law and the consultation process closes on 13 March 2023 but first seeks views on:

• proposals for any alternative schemes;
• should the new scheme be an above the line RDEC-like credit?
• should more generous support should be provided for more R&D intensive companies;
• should any thresholds be in place regarding the claiming of expenditure;
• the specific treatment of subcontracting; and possible simplification regarding the PAYE/NICs cap.

Personally, I believe the timeline seems ambitious and does not permit companies the bandwidth to adjust forward projections or allow timely cash flow planning tweaks. More importantly there will be some significant “losers” here as it seems those intensive R&D SMEs would see their R&D rate cut significantly.

Please get in touch if you would like to discuss this, or any other aspect of R&D tax relief.

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