This article was updated on 31st July to reflect the change to the submission date.
From 8th August 2023, the process for claiming Research and Development tax relief will change. Piers Pye-Watson, our R&D Tax Manager, answers some common questions we have received on the upcoming changes to R&D tax credits.
The government announced changes to the R&D tax relief scheme in the Spring Budget 2023. These aim to reduce the number of fraudulent claims made to HMRC, however they will result in a more complex and time-consuming process for legitimate claimants too.
The majority of the changes announced in the budget were introduced in April 2023 but another change is set to take effect from August.
What is R&D tax relief
The R&D tax credit scheme plays a vital role in promoting innovation within UK companies. A successful claim can significantly reduce the costs associated with your research and development activity and provide your business with additional funds to re-invest in further innovation.
If you are looking for more information on the R&D tax credit scheme and its benefits for business, you can download our R&D guide, which summarises the scheme and everything you need to know about submitting a claim.
Download our R&D tax credits guide
Changes to R&D tax credits from August 2023
A new additional information form will need to be submitted for R&D claims made on or after 8th August 2023. This form will become compulsory and without it HMRC will not process claims.
Please note that HMRC changed the submission date from 1 August 2023 to 8th August 2023.
What information is required on the additional information form
You will need to provide the following information on the new additional information form:
- A breakdown of your qualifying expenditure
- Details of your R&D projects
- Details of the senior R&D contact at your company
- Details of any agent that advised you on your claim
It is crucial that your additional information form is filled in correctly and before your company’s corporation tax return.
What project details need to be provided?
Depending on how many R&D projects you had during the year, you may need to provide descriptions of the following of each project:
- What is the main field of science or technology?
- What was the baseline level of science or technology that the company planned to advance?
- What advance in that scientific or technological knowledge did the company aim to achieve?
- The scientific or technological uncertainties that the company faced
- How did you project seek to overcome these uncertainties?
What changes were made in April 2023?
The following changes to the R&D claims process came into force in April:
- R&D tax credit rates changed. For SMEs, the enhanced deduction decreased from 130% to 86% and the R&D tax credit that could be applied to qualifying losses was reduced from 14.5% to 10%. For large companies, the Research and Development Expenditure Credit (RDEC) increased from 13% to 20%.
- All R&D claims must be made online (with the exception of businesses exempt from submitting a company tax return digitally)
- Businesses are required to provide HMRC with advance notice of their intention to submit an R&D claim. This notification should be submitted within six months of the end of the tax period they wish to claim for.
Who will be affected by the changes
Any business that currently claims or plans to claim the Research and Development Expenditure Credit (RDEC) or the SME tax relief will be affected by the changes to R&D tax credits in April and August 2023.
Specialist support with your R&D tax credit claim
We have helped many businesses successfully claim R&D tax credits in the UK. Our R&D specialists can save you the time and stress of navigating the complex claims process, while making sure your claim is accurate and all-encompassing to maximise your returns.
Contact us today to speak to one of our team about your business needs.