There are currently two schemes for claiming R&D tax relief – the Small or Medium-sized Enterprise (SME) Scheme and the R&D Expenditure Credit (RDEC) Scheme for large companies. The amount of R&D tax relief available depends on the total qualifying spend on R&D activities.
It was announced as part of the Autumn Statement 2022 measures that the Research and RDEC rate will increase to 20% (from 13%) with effect from 1 April 2023. From the same date, the SME additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%. These changes will see the two schemes broadly aligned.
A new consultation has been launched to examine simplifying how R&D relief works. The 8-week consultation, which runs from 13 January 2023 to 13 March 2023, sets out proposals on how a single scheme could be designed and implemented. The new scheme would be designed to simplify the R&D system and provide more information about how much relief businesses will be able to claim from the outset. If implemented, the new scheme is expected to be in place from 1 April 2024.