R&D Tax Credits – additional changes from Budget 2023

Date: April 14, 2023

R&D Tax credits were once again in the spotlight, with the Chancellor announcing further changes at Budget 2023. Whilst previous announcements appeared to reduce the scope of some claims, especially for SME’s and to help curb reported misuse, announcements in Budget 2023 appeared to give something back.

In the Budget, the Chancellor stated that he wanted to make taxes more competitive in the UK’s life science and creative industry sectors. He added that in his previous Autumn Statement, he said he would come back with a more robust R&D tax credit scheme for smaller research-intensive companies. Below are a summary of the key changes:

R&D Enhanced Credit

Budget 2023 introduced an enhanced credit for R&D, in a £1.8 billion package of support, claimed to assist 20,000 UK companies.

This measure means that if a qualifying SME business spends 40% or more of their total expenditure on R&D, they can claim a credit equal to £27 for every £100 spent.

The Chancellor gave an example where an eligible company spending £2 million on research and development would receive over £500,000 from this scheme.

Restrictions on overseas expenditure in R&D delayed

The restriction on claiming R&D relief for overseas expenditures will now come into effect a year later. This will now be from 1 April 2024 instead of 1 April 2023. The Government claims this is to allow time to review feedback and 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. This would also look to merging the existing two schemes.

Additional Information Form requirements amended until 1 August 2023

R&D submissions were due to submit an Additional Information Form where accounting periods began on or after 1 April 2023. The Chancellor announced at Budget 2023 that this will now be required for all claims made from 1 August 2023.

This announcement brings forward the requirement for many companies, to provide extra information. However, Alexander & Co already provides this extra level of scrutiny as standard for all its Research and Development claims.

Summary of previously announced Research and Development Tax changes

From 1 April 2023, qualifying R&D tax relief expenditure is extended to allow cloud and data costs and pure mathematics as qualifying costs. New Research and Development tax relief rates for the SME and RDEC scheme will also take effect. More on this can be found here.

Alexander & Co – expert Research and Development tax advice from Qualified Chartered Tax Advisors

Alexander & Co’s research and development tax team consist of qualified Chartered Tax Advisors and Chartered Accountants. Because of this, you are in safe hands. Our years of expertise ensures 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, please email info@alexander.co.uk or complete the form on this page.