R&D Tax Relief Reform - changes from 1 April 2023

Research and Development (R&D) tax relief reform — changes from 1 April 2023

On 1 April 2023, several changes come into effect for Research and Development tax relief.

For expenditure on or after 1 April 2023:

• rate changes announced at Autumn Statement 2022 apply — the additional deduction rate in the small and medium sized companies scheme will be 86%, the payable credit rate 10% and the R&D Expenditure Credit rate will be 20%
• loss-making SME companies whose qualifying R&D expenditure constitutes at least 40% of their total expenditure will be able to claim a higher payable credit rate of 14.5% later in the year — the government has published a technical note giving details of the new higher Research and Development payable credit rate measure works in greater detail
• the guidelines on the meaning of research and development for tax purposes extend the definition of R&D for tax purposes to include pure mathematics

For accounting periods starting on or after 1 April 2023:

• some businesses will be required to provide claim notification ahead of a claim for R&D tax relief — claim notification must be provided through an online form and submitted no later than 6 months after the end of the period of account that the claim falls into
• businesses will be able to claim qualifying expenditure on data licences and cloud computing costs

As announced at Spring Budget 2023, from 1 August 2023 all companies will be required to submit an additional information online form in advance of or at the same time as the Company Tax Return containing the claims.

Links to the forms and supporting guidance will be published on GOV.UK on 1 April 2023.