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
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.
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 firstname.lastname@example.org