Research and Development (R&D) tax credits are a valuable resource for businesses that are investing in innovation. These tax credits provide a way for businesses to offset their costs and increase their cash flow.
In 2023, there are a number of changes to R&D tax credits in the UK that businesses need to be aware of. Here are 5 things you need to know:
Will Tax Credits Increase in 2023?
For expenditure incurred on or after 1 April 2023, the RDEC rate for large companies will increase from 13% to 20%. In contrast, the SME additional tax deduction will decrease from 130% to 86%.
The SME Credit Rate
The SME credit rate will remain at 14.5% for loss-making SMEs spending 40% of their expenditure on R&D, but will be cut to 10% for other companies.
Amendments To The Department for Science, Innovation and Technology
The Government amended its guidelines to show the new treatment of mathematics R&D for tax purposes from 1 April 2023, with mathematical advances in themselves being treated as science. This means that some cloud computing solutions and data licensing costs are now eligible for relief.
Updated Submission Requirements
Starting from the 1st of August, you must submit more detailed forms for all of your claims. This includes an additional information form to HMRC for supporting your R&D relief.
You can complete the additional information form if you’re:
- a representative of the company
- an agent acting on behalf of the company
You will need a range of information, including qualifying expenditure details, qualifying indirect activities, project details, and descriptions of each project.
The New Notification Form
You will now need to submit a claim notification form for accounting periods beginning on or after 1 April 2023 if:
- you’re claiming for the first time
- you’ve claimed for the previous tax year, but you did not submit that claim until after the last date of the claim notification period
- your last claim was made more than 3 years before the last date of the claim notification period.
The latest date that you must submit this form is 6 months after the end of the period of account that the claim relates to. If you miss the deadline, then the claim will not be valid.
How The R&D Tax Credit Changes Impact Businesses
R&D tax relief is a valuable resource for businesses that are investing in innovation. The changes to R&D tax credits in 2023 will impact businesses in a number of ways, and it is important for businesses to stay up-to-date with these changes.
By understanding the impact of changes to the scheme and payable tax credit, businesses can make the most of R&D tax relief to support their innovation.
If you are looking for R&D tax credit specialists to assist you with a claim, get in touch with our friendly team today. We operate on a no-win-no-fee basis, and make the claim process seamless for your business.