Calling time on the highest R&D tax relief rate
For accounting periods beginning on or after 1 April 2023, HMRC implemented significant reforms to the R&D tax relief schemes, with the intention of reducing the high levels of fraud and abuse within its schemes while streamlining the available incentives and enhancing compliance.
As part of these measures, from 1 April 2023 the available rates of relief decreased significantly from 130% to 86% along with the tax credit rates which were reduced from 14.5% to 10%. In real terms, this means that for every £1 of qualifying R&D expenditure, the tax saving pre-1 April 2023 ranges between 24.7p to 33.35p, compared to 16.34p to 22.79p post-1 April 2023.
Companies with a 31 March 2023 year-end have just six weeks to claim R&D tax relief at the most advantages pre-April rates, with the statutory deadline for filing an amended return being 31 March 2025.
While the R&D tax relief scheme offers substantial financial benefits, the claims process can be intricate. Although many companies are performing R&D, in order to be eligible to claim R&D tax relief each project must meet HMRC’s specific criteria. At YesTax we are adept at explaining the qualifying criteria and identifying if your company is eligible to claim the relief.
If you would like to discuss the above further, please get in touch via hello@yes.tax.
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