Last updated: 29 Apr 2024 02:00 Posted in:
Changes to the Research and Development (R&D) regime previously announced by HMRC have now come into effect, for accounting periods beginning on or after 1 April 2024.
These changes are:
• the previous small and medium-sized enterprise (SME) and Research and Development expenditure credit (RDEC) schemes have been merged — the new scheme, the merged RDEC, will be available to all businesses undertaking qualifying R&D irrespective of size.
• the SME scheme is no longer available (though valid claims for accounting periods beginning before 1 April 2024 can still be made, until excluded by normal time limits).
• for accounting periods beginning on or after 1 April 2024, large companies will claim under the new merged RDEC rules, rather than the previous rules —although there are many similarities with the old RDEC scheme, there are also some important differences — you can read more information about the merged scheme.
• for R&D intensive SMEs, the intensity threshold to qualify for the higher rate of payable credit of 14.5% is 30% rather than 40% and SMEs also now have to be loss-making before any additional deduction is taken — this is now referred to as enhanced R&D intensive support (ERIS).
• specific rules for businesses with a registered office in Northern Ireland claiming ERIS.
• HMRC will (subject to certain limited exceptions) no longer pay R&D tax credits to nominated third parties though generally, only the claimant company itself can receive relief — this applies to claims made on or after 1 April 2024 (not accounting periods beginning on or after that date) — detailed technical guidance is available at CIRD81805.
HMRC said that, as part of the R&D changes, there have been further updates to additional information requirements. All claims submitted on or after 8 August 2023 require a validly completed Additional Information Form (AIF).
HMRC said: “In February 2024, we updated the AIF to include questions relating to a businesses’ intensity ratio for those businesses wanting to claim enhanced support for loss-making R&D intensive SMEs.
“Some businesses have asked us about the qualifying expenditure section of the AIF. The guidance for submitting your information to support claim sets out what should be included. Use the guidance as the basis for completing the AIF, not the on-screen prompts. We are working to update the AIF as soon as we can.
“The AIF will be further updated from 8 May 2024 to accommodate changes coming into force for claims for accounting periods beginning on or after 1 April 2024. HMRC do not expect many claims for accounting periods beginning on or after 1 April to be submitted before 8 May. Any businesses wanting to claim for these accounting periods in this time window should consider whether they will be able to provide enough evidence to HMRC of their relevant R&D to enable their claim to be processed effectively if they choose to submit it before the AIF has been updated.”
