The UK’s R&D tax credits landscape is transforming with the new merged R&D scheme, effective from April 2024. This scheme streamlines the claim process, benefiting companies, advisors, and accountants. Understanding these changes is crucial for maximizing benefits.
Key Changes in the New R&D Scheme
Effective Date and Transition Period
From April 1, 2024, all companies must use the new merged R&D scheme for accounting periods starting on or after this date. Until April 1, 2026, four schemes will coexist: SME Scheme, RDEC Scheme, Merged Scheme, and R&D Intensive Scheme.
Simplified Claims Process
The new scheme reduces administrative burdens, making it easier for companies to claim R&D tax credits. This streamlined process enhances accessibility and efficiency.
R&D Intensive Scheme
This scheme, tailored for loss-making companies, introduces key modifications:
Eligibility: Designed for loss-making entities.
R&D Expenditure Threshold: 40% from April 1, 2023, and 30% from April 1, 2024.
Changes in Grants and Subsidies
Previously, companies receiving grants or subsidies had to file R&D claims through the RDEC scheme. The new merged scheme allows grants and subsidies without affecting eligibility or the claim process.
Subcontractor Eligibility
Subcontractors can now claim R&D credits when engaging in R&D projects on behalf of another company, providing greater flexibility.
Qualifying Costs
Eligible expenses include staff costs, software & data, consumables, clinical trial subjects, externally provided workers, and subcontractors.
Pre-notification and PAYE Cap
Starting April 2023, HMRC’s pre-notification tool enhances engagement with businesses. The PAYE cap applies to high-risk claims involving subcontractors and externally provided workers.
Implications for Your Business
The new scheme simplifies the R&D tax credit claim process, making it more efficient. Loss-making entities can benefit more from the R&D Intensive Scheme. Changes in subcontractor eligibility and grants offer greater flexibility. Proper compliance and documentation are crucial for successful claims.
Preparing for the Transition
Educate your team about the new regulations, review and update your R&D strategy, and consult with advisors to maximize benefits.
Business Innovation Group is here to guide you through these changes, ensuring your company maximizes its potential for growth and innovation. Let’s navigate this journey together and unlock new opportunities for your business.
