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The Spring Budget – Did it bring further reforms to R&D tax?

Author: Jonathan Wilde

The key details of the Chancellor’s speech have been laid bare to Parliament, but in a first for Jeremy Hunt, he failed to announce any further reforms to R&D tax relief – at least in his statement in the House of Commons.

Dig a little bit deeper into the Spring Budget documents and there is still one new measure to consider.

Formation of expert advisory panel

HM Revenue & Customs plans to set up a panel of experts to aid in the management of R&D tax relief schemes.

This panel will offer expertise on the latest R&D activities in critical industries, such as technology and life sciences.

They will collaborate with HMRC to periodically assess and update guidance, ensuring it remains relevant and clear for those making claims.

Further change is coming

While the Chancellor’s decision to leave the R&D tax schemes largely alone in his latest Budget provides some certainty to innovative businesses, a big set of challenges already lies ahead with the merging of the SME and Research Development Expenditure Credit (RDEC) schemes.

Starting April 1 2024, R&D tax credits are being revamped. The Autumn Statement in 2023 announced the merger of the SME and RDEC schemes for accounting periods beginning on or after this date.

However, loss-making SMEs spending more than 30 per cent of their total expenditure on R&D can access a new SME-intensive scheme, a change from the previous 40 per cent threshold.

The reformed system will offer a 20 per cent tax credit for the unified scheme, while the specific SME-intensive scheme provides a 27 per cent tax credit for qualifying businesses.

Despite these changes, companies can still claim retrospectively under the previous SME and RDEC schemes for up to two previous accounting periods plus the current one, until the end of March 2024 – so time is running out.

Need help with your upcoming claims?

If you would like assistance preparing claims, either under the existing system or the newly merged system from April, we are here to help.

To find out how much you could claim, why not try out our FREE R&D tax calculator: