The Government announced that it was increasing the rate of the Research
& Development Expenditure Credit (‘RDEC’) for large companies from 12% to 13%, which will apply to qualifying expenditure incurred on and after 1 April 2020.
There has been an increase in the rate of relief available to large
companies in recent years and this latest change follows that trend, indicating that R&D tax relief is here to stay.
SME scheme regulations
Whilst the RDEC scheme was created by domestic tax legislation, the SME scheme is an EU notified state aid and is subject to EU law.
Any changes made to the SME scheme over the next few years will depend on the trade terms agreed over the course of this year with the EU.
As a result of consultations, the introduction of the PAYE cap on the payable tax credit for SME R&D claims will be delayed until 1 April 2021.
The Government has listened to industry and will also consult on changes to the cap’s design, to ensure it targets abusive behaviour as intended while ensuring that eligible businesses are able to access the relief.
The Government will also consult on whether qualifying R&D tax credit costs should include investments in data and cloud computing and we will await the findings of this consultation.
Further information on R&D claims
To discuss the impact of these new announcements, or to discuss any other matter related to your R&D tax relief claim, get in touch with our specialist team today and we’d be happy to advise you.