Changes to research and development relief claims are due to come into effect and will apply to accounting periods beginning 1 April 2023 or later.
One of the key changes is the requirement for companies to notify HMRC that they intend to make an R&D claim. This applies to first-time claims or those who have not made a claim for the past 3 accounting periods. The notification simply requires the company’s UTR, contact details and the start and end dates of the accounting period that the claim relates to. The notification does not require any specific details relating to the R&D activity or qualifying expenditure incurred. The notification must be made within 6 months from the last day of the claim period. This will be made online using an accessible form from gov.uk. It is not yet clear whether the notification can be made by an agent. Further details will be provided once these are available.
Some of the other key changes are as follows:
- For each project where you are making a R&D claim, the split of the costs being claimed will need to be submitted to HMRC along with a brief description of each project. Each claim will have to be endorsed by a director and if advice is provided on compiling the claim, then the advisor needs to be detailed.
- You will no longer be able to claim relief for overseas subcontracted expenditure or overseas externally provided workers. The only reasons this may be allowed are where there are logistic or legal/regulatory reasons for the R&D not taking place in the UK.
There will also be changes to the R&D tax relief for SMEs and RDEC:
- Research & Development Expenditure Credit (RDEC) is currently set at 13% of qualifying R&D expenditure. This will rise to 20%.
- R&D relief for Small & Medium Enterprises (SMEs) is currently set at 130%. This will reduce to 86%.
- The rate which can be claimed for surrenderable losses is currently set at 14.5%. This will reduce to 10%.
If you require any assistance or advice relating to these changes, please get in touch with your usual contact or email firstname.lastname@example.org