UK and International Tax news
Consultation On A Single R&D Tax Relief Scheme
Tuesday 31st January 2023
HM Treasury has launched a consultation on a single simplified R&D tax relief scheme, merging the existing large company RDEC and SME R&D relief schemes.
In the Autumn 2022 Statement the Chancellor announced that, as part of the ongoing R&D tax reliefs review, the Government would reform R&D tax reliefs to ensure taxpayers’ money is spent as effectively as possible to support innovation, improve the competitiveness of the RDEC scheme, and to take a step towards a simplified, single relief based on the RDEC scheme.
The latest consultation invites comments by 13 March 2023 on the design features between the two scheme and proposals and, in particular, on subcontracting costs, adopting SME scheme and/or RDEC rules, the cap on payable credits, additional targeted support for different types of R&D, or for more R&D intensive companies, on qualifying indirect activities, and whether a claim threshold should be reintroduced.
For SMEs, the new credit is intended to be simpler to administer and use with the above the line credit helping R&D tax reliefs play a more central role in business decision making. The views of those involved in this process will be important in helping shape the final proposal. The Government also particularly welcomes views on the operation of the existing RDEC scheme.
Once the Government has decided whether or not to merge schemes and the potential design of the single scheme, a final rate will be decided within the cost envelope of the R&D reliefs and announced at a future fiscal event. This will not be consulted on. It is currently the Government’s intention that, if implemented, the new scheme will be in place for expenditure incurred from 1 April 2024.
If you would like more detail on the consultation, please contact Keith Rushen on 0207 486 2378.
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