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< Back to Latest News Studies Newsletter: R&D Tax Credits Update (Issue 15)

Talking Tax: March 2023

Author: Adam Spriggs, R&D Tax Director

A brief R&D update from Director, Adam Spriggs, following the Spring budget announcement.

SME Credit Change
Following the reduction of the SME credit to 10% in November, loss making SMEs that spend at least 40% of their total expenditure will qualify for a higher tax credit of 14.5% (what it was pre November’s statement) – 186% uplift x 14.5% credit – 26.97% – however this may only benefit an even smaller percentage of companies than first thought.

Whilst the credit increases start from 1 April 2023 (following legislation being passed) and will be applied to expenditure after this date, accounting periods straddling this period will still need to meet the 40% requirement for the entire period. Meaning a company with a June 2023 year end will need to have R&D expenditure between April-June that meets 40% of their annual expenditure.

With a proposed merged scheme in discussion from April 2024 (see below) it will be very interesting to see stats on how many company’s qualify for the effective 26.97% benefit

Overseas Workers
The proposed restriction on overseas workers that was due to come into force from 1 April 2023, has been deferred until 1 April 2024 to allow for consideration with the proposed merged scheme.

Single Scheme
Following the consultation that ended earlier this week, draft legislation will be released in the summer for consultation on a proposed single R&D scheme to come into force from April 2024.

For help with R&D Tax Credits, contact Adam Spriggs on adam@gozeal.co.uk