UK R&D Tax Credits in 2025: What’s Really Changed Over the Last 4 Year…
페이지 정보
본문
Over the last four years, the UK’s R&D tax relief system has undergone more changes than in the previous decade.
If you’re feeling confused about what’s eligible and what the value of your claim is, you’re far from alone.
Hamilton Wood & Company has guided many businesses through these evolving rules and regulations over the past few years.
In this article, we’ll explain what R&D tax credits look like today, outline the major changes since 2021, and give you insights into how to approach your next claim.
What R&D Tax Relief Is Really About
The purpose of R&D tax relief is to encourage UK businesses to engage in R&D by providing financial support for tackling technological or scientific challenges.
It’s not just for routine work – it’s designed for businesses taking risks to develop innovative solutions that are not immediately obvious.
For many years, there were two primary schemes: the SME scheme for smaller businesses and the RDEC scheme for larger companies.
From 1 April 2024, most businesses will operate under a consolidated RDEC-style scheme, with extra incentives for R&D-intensive SMEs.
2021-2022: Tighter Caps and Rising Compliance Pressure
Long before the most recent changes, HMRC was tightening up the rules on cash credits for R&D claims.
In April 2021, the government reintroduced a cap on cash credits for SMEs, limiting the amount of relief that could be claimed.
The cap limited SMEs to claims of no more than £20,000, plus three times their PAYE and National Insurance contributions.
Alongside these changes, HMRC started focusing more on the quality of R&D claims, initiating more compliance checks.
HMRC made it clear that while R&D relief was still available, it would be scrutinised more closely, and only claims backed by solid evidence would be approved.
April 2023: Rate Cuts for Many SMEs, More Generosity for R&D-Intensive Firms
April 2023 saw a sharp decline in the rates for many SME R&D claims.
For SMEs, the on qualifying R&D costs was reduced from 130% to 86%, and the cash credit for loss-making companies dropped from 14.5% to 10%.
This effectively reduced the cash benefit for many SMEs from about 33% of eligible spend to around 18.6%.
However, a special regime was introduced for R&D-intensive SMEs.
For companies where R&D expenditure accounts for a large portion of total costs, they can still claim a 14.5% cash credit, which can result in around 27% of eligible spend being returned.
2023-2024: New Forms, Pre-Notification, and Increased Documentation
As of 8 August 2023, every R&D claim had to be accompanied by a detailed Additional Information Form (AIF), submitted before the CT600 return.
This reform introduced a new step to ensure that all claims are properly documented and compliant.
Additionally, companies that have not made an R&D claim in the last three years must pre-notify HMRC of their intention to claim within six months of the year-end.
Failure to meet these deadlines can result in the claim being invalid.
April 2024: The Merged RDEC-Style Scheme and Enhanced Support for SMEs
From 1 April 2024 onwards, the SME and RDEC schemes will be merged into a single R&D Expenditure Credit (RDEC)-style system.
Most companies will now be able to claim a taxable credit of 20% on qualifying R&D expenditure.
For companies paying the standard 25% Corporation Tax rate, the net benefit is typically around 15%.
For R&D-intensive SMEs, there will also be Enhanced R&D Intensive Support (ERIS), which continues to offer a more generous package.
These businesses can still claim the 186% deduction and a 14.5% cash credit on qualifying losses, with a return of up to about 27%.
Changes to Overseas R&D Costs Starting April 2024
From April 2024, most payments to overseas contractors and workers will no longer qualify for R&D tax relief.
Only certain "qualifying overseas expenditure" will remain eligible, requiring detailed evidence to justify why the work could not be done in the UK.
What Does All of This Mean for Your Next Claim?
In conclusion, while the UK government remains committed to encouraging R&D, the new rules are tighter and require more detailed evidence and UK-based activity.
To maximise your benefit under the current system, businesses must ensure they understand which regime applies, model their expected claims accurately, and prepare the right documentation.
Hamilton Wood & Company helps businesses across the UK to optimise their R&D tax claims under the new rules.
If you’re unsure about how these changes affect your claim, or you need assistance with an upcoming submission, we’d be delighted to talk.
If you’re feeling confused about what’s eligible and what the value of your claim is, you’re far from alone.
Hamilton Wood & Company has guided many businesses through these evolving rules and regulations over the past few years.
In this article, we’ll explain what R&D tax credits look like today, outline the major changes since 2021, and give you insights into how to approach your next claim.
What R&D Tax Relief Is Really About
The purpose of R&D tax relief is to encourage UK businesses to engage in R&D by providing financial support for tackling technological or scientific challenges.
It’s not just for routine work – it’s designed for businesses taking risks to develop innovative solutions that are not immediately obvious.
For many years, there were two primary schemes: the SME scheme for smaller businesses and the RDEC scheme for larger companies.
From 1 April 2024, most businesses will operate under a consolidated RDEC-style scheme, with extra incentives for R&D-intensive SMEs.
2021-2022: Tighter Caps and Rising Compliance Pressure
Long before the most recent changes, HMRC was tightening up the rules on cash credits for R&D claims.
In April 2021, the government reintroduced a cap on cash credits for SMEs, limiting the amount of relief that could be claimed.
The cap limited SMEs to claims of no more than £20,000, plus three times their PAYE and National Insurance contributions.
Alongside these changes, HMRC started focusing more on the quality of R&D claims, initiating more compliance checks.
HMRC made it clear that while R&D relief was still available, it would be scrutinised more closely, and only claims backed by solid evidence would be approved.
April 2023: Rate Cuts for Many SMEs, More Generosity for R&D-Intensive Firms
April 2023 saw a sharp decline in the rates for many SME R&D claims.
For SMEs, the on qualifying R&D costs was reduced from 130% to 86%, and the cash credit for loss-making companies dropped from 14.5% to 10%.
This effectively reduced the cash benefit for many SMEs from about 33% of eligible spend to around 18.6%.
However, a special regime was introduced for R&D-intensive SMEs.
For companies where R&D expenditure accounts for a large portion of total costs, they can still claim a 14.5% cash credit, which can result in around 27% of eligible spend being returned.
2023-2024: New Forms, Pre-Notification, and Increased Documentation
As of 8 August 2023, every R&D claim had to be accompanied by a detailed Additional Information Form (AIF), submitted before the CT600 return.
This reform introduced a new step to ensure that all claims are properly documented and compliant.
Additionally, companies that have not made an R&D claim in the last three years must pre-notify HMRC of their intention to claim within six months of the year-end.
Failure to meet these deadlines can result in the claim being invalid.
April 2024: The Merged RDEC-Style Scheme and Enhanced Support for SMEs
From 1 April 2024 onwards, the SME and RDEC schemes will be merged into a single R&D Expenditure Credit (RDEC)-style system.
Most companies will now be able to claim a taxable credit of 20% on qualifying R&D expenditure.
For companies paying the standard 25% Corporation Tax rate, the net benefit is typically around 15%.
For R&D-intensive SMEs, there will also be Enhanced R&D Intensive Support (ERIS), which continues to offer a more generous package.
These businesses can still claim the 186% deduction and a 14.5% cash credit on qualifying losses, with a return of up to about 27%.
Changes to Overseas R&D Costs Starting April 2024
From April 2024, most payments to overseas contractors and workers will no longer qualify for R&D tax relief.
Only certain "qualifying overseas expenditure" will remain eligible, requiring detailed evidence to justify why the work could not be done in the UK.
What Does All of This Mean for Your Next Claim?
In conclusion, while the UK government remains committed to encouraging R&D, the new rules are tighter and require more detailed evidence and UK-based activity.
To maximise your benefit under the current system, businesses must ensure they understand which regime applies, model their expected claims accurately, and prepare the right documentation.
Hamilton Wood & Company helps businesses across the UK to optimise their R&D tax claims under the new rules.
If you’re unsure about how these changes affect your claim, or you need assistance with an upcoming submission, we’d be delighted to talk.
- 이전글The 9 Things Your Parents Taught You About Secure Window Handle Replacement 25.12.10
- 다음글Zeman Explains in an Email Interview 25.12.10
댓글목록
등록된 댓글이 없습니다.
