Government launches consultation on R&D relief

The government has launched a consultation on simplifying the UK’s research and development (R&D) tax relief system, driving innovation and growing the economy.

• R&D tax relief reform set to simplify the system and help grow the economy
• Clearer information about how much relief business will receive to be offered up front, helping them budget for R&D
• Follows £20 billion investment in R&D from government at Autumn Statement and the Chancellor’s pledge to understand how to provide further support for R&D intensive SMEs.

The 8-week consultation, which runs from 13 January to 13 March 2023, sets out proposals on how a single scheme could be designed and implemented. This would replace the two R&D tax relief schemes currently in place – the Research and Development Expenditure Credit (RDEC) and the small and medium enterprises (SME) R&D relief.

A scheme modelled on the current RDEC for SMEs would also give decision makers in smaller companies clearer information, which will help them set budgets for R&D. In contrast, for those claiming SME tax relief in the current setup, the exact amount of money their firm will receive can only be known with certainty at the end of accounting period.

This is part of the government’s ongoing R&D tax reliefs review, and follows changes announced at Autumn Statement 2022 where the generosities of the two R&D tax schemes were broadly aligned, with the Chancellor pledging to work with industry to understand how to provide further support for R&D intensive SMEs.

Click here to read more