New Forest


Get ready for more R&D changes

On top of the major changes to research and development (R&D) tax relief that took effect from 1 April 2023, there are yet more changes that take effect from 1 April 2024.

For accounting periods commencing on or after 1 April 2024, the SME and RDEC schemes will be merged into one single scheme. Companies carrying out qualifying R&D will now be entitled to a 20% expenditure credit. The 20% is calculated on the amount of qualifying expenditure. The net benefit to companies will be effectively 15% (after accounting for the corporation tax due on the credit).

Qualifying expenditure is extended to include subsidised expenditure from 1 April 2024, although R&D carried out overseas will no longer qualify unless the work cannot be undertaken in the UK.

“R&D intensive” companies will continue to benefit from the more generous SME regime and so obtain more corporation tax relief.

The definition of an “R&D intensive” company is when R&D expenditure represents 30% of total expenditure (this was reduced from 40% to 30% for accounting periods beginning on or after 1 April 2024).

R&D tax relief continues to be a complex area and we can work with you to help you prepare a valid claim as HMRC are now scrutinising and rejecting an increasing number of claims.

If you need any help with the R&D changes, please contact 023 8046 1237, or email Joe Wilson.

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