The Autumn Statement today has announced that the overhaul of R&D relief will go ahead from April 2024 merging the two systems and reducing the intensity threshold from 40% to 30% for SMEs with a soft landing
This will allow an extra 5,000 SMEs to qualify for R&D tax relief, the Chancellor said.
Rates for companies at a loss will be reduced from 25% to 19% and the thresholds will be reduced from 40% to 30% from 1 April 2024. HMRC calculates R&D intensity as the proportion of an SME’s qualifying R&D expenditure compared to its total spending.
Along with these changes a one-year grace period is being introduced for companies that dip below the 30% that guarantees companies relief for the next year.
The Autumn Statement Green Book confirmed that the profitable businesses credit rate will be reduced to 15% while loss makers will be penalised having to pay a 16.2% rate.
By the 2028-2029 period these changes are predicted to cost £280m in tax relief per year.
The R&D Expenditure Credit and the SME scheme will be merged from 2024 and will stop complex transition between the two schemes as currently happens.
R&D claimants will also no longer be able to nominate a third-party payee for the relief payment. Only the claimant will receive the tax credits and no new assignments of the credit will be possible from 22 November for existing claims.