R&D Tax Credit changes from August 2023 business should be aware of
Additional R&D tax credit changes (also known as Research and Development Tax credit) took affect from August 2023. These were originally due to be operational from April 2023 and delayed by the Chancellor. This now means that any claim from 1 August 2023 will now require much more, detailed information. This is in addition to other changes implemented in April 2023.
This will bring additional complications and an increased time burden for many companies in the provision of this additional detailed information. Fortunatly, Alexander & Co already provides this extra level of scrutiny as standard for all its Research and Development claims.
August 2023 R&D Tax Credit changes
From August 2023, additional detailed information relating to the research undertaken needs to be submitted to HMRC in a R&D claim. A new additional information form is required for this. Failure to include this information will result in automatic rejections of any claim. HMRC believe this will help identify fraudulent claims.
R&D tax credit claims – technical information
You need to provide a detailed description of the projects in your claim. How many projects you describe will depend upon the total number of projects relating to the claim.
You must provide detailed information with regards to six specific questions:
- Explain which R&D scheme you are applying under and the amount you are seeking to claim.
- Describe the main field of science or technology relating to the claim.
- Describe the baseline level of science/technology which you planned to advance.
- Explain the advance in scientific or technical knowledge which you aimed to achieve.
- Detail the scientific/technological uncertainties that the project faced.
- Explain how the project looked to overcome the detailed uncertainties.
Previous R&D Changes
In Budget 2023, the Chancellor Jeremy Hunt, explained that he wanted to make taxes more competitive in the UK’s life science and creative industry sectors. The previous changes are as follows:
R&D Enhanced Credit
This is an enhanced credit for R&D. A qualifying SME business spending 40% or more of their total expenditure on R&D, can claim a credit equal to £27 for every £100 spent.
Restrictions on claiming Research and Development Tax Credit
Restriction on claiming R&D tax credit relief for overseas expenditures is postponed. This will now come into effect a year late than planned, from 1 April 2024. The Government claims this is to allow time to review feedback and to enable it to act upon its recent R&D consultation. This consultation was on the implementation of a solo, simplified research and development (R&D) tax relief scheme, merging the existing two schemes.
Cloud & data costs and pure mathematics
Qualifying R&D tax relief expenditure is now extended to include cloud and data costs. The relief also includes pure mathematics as qualifying costs. This came into effect on 1 April 2023. New Research and Development tax relief rates for the SME and RDEC scheme now apply. More information is available here.
Alexander & Co – expert Research and Development tax advice from Qualified Chartered Tax Advisors
The research and development tax team at Alexander & Co consist of qualified Chartered Tax Advisors and Chartered Accountants. This means you are in safe hands. Alexander & Co’s many years of expertise ensures that all research and development claims are conducted correctly, accurately and to the highest professional standards.
We work with a diverse range of businesses undertaking R&D tax claims. To find out how we can assist your businesses and help it flourish, please email firstname.lastname@example.org or complete the form on this page, and we will be in touch.
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- R&D Tax Credits – the importance of professional advice as HMRC cracks down on fraud and improper claims
- R&D Tax Credits – additional changes from Budget 2023
- Case study – Over £170,000 R&D tax reduction secured for a medical technology company