Government changes set to streamline UK's R&D tax system

At the beginning of 2023, the UK Government launched a consultation to simplify the UK’s R&D tax relief system, drive innovation and grow the economy. 

 

The eight-week consultation ran from mid-January until mid-March. The final proposal? To develop and implement a single R&D tax relief scheme that will take the place of the two-tiered RDEC and SME R&D tax relief framework currently in place. 

 

The new proposal is modelled on the current schemes and will give decision makers in smaller companies' clearer information about their tax relief eligibility, which will help them proactively set budgets for R&D. For SMEs claiming under the current regime the exact amount of relief available to them is only apparent at the end of the accounting period. 

 

In the Autumn Statement 2022, the Chancellor pledged to work with companies to understand how best to provide further support for R&D intensive SMEs. The tax reliefs provided by the UK government still have an important role to play in encouraging businesses both large and small across the UK to invest in R&D. Innovation that creates new technologies, products or services has a real impact on lives and livelihoods. Backing R&D is backing progress. 

 

The Financial Secretary to the Treasury, Victoria Atkins had this to say; 

 

“We are focused on growing the economy – with thriving businesses bringing more jobs, higher pay, and more tax revenue to fund our precious public services. Getting R&D tax relief right and fit for the future sits at the heart of making sure the UK remains a competitive location for cutting edge research – helping new firms grow. I welcome views on the option to simplify the scheme, especially from those who have experience of the existing tax reliefs.” 

 

It is unusual to have two schemes running about the same piece of legislation. Moving to a single scheme is set to streamline the R&D tax system in line with the government's overall plans for tax simplification. 

 

If implemented this new scheme will kick off in April 2024. To keep up to date with the latest guidance it is good to bring on a specialist R&D Tax Credit Consultant.

 

At Momentum Group, specialist R&D Tax Credit consultants we constantly monitor the newest legislative developments and ensure that we, our clients, and potential clients stay informed about any changes. 

 

Many businesses are unaware that they may be entitled to claim credit against their R&D expenditure. Equally, we often help other companies who are not taking full advantage of the R&D tax incentives that are available to them. Contact Momentum Group today.