There are two key elements to be aware of:
ADVANCE NOTIFICATION
For accounting periods beginning on or after 1 April 2023, companies must advance notify HMRC of their intention to make an R&D claim within 6 months of the year-end. Broadly the requirement is restricted to those companies who have not made a R&D claim before or where this is the first claim in 3 years. Failure to notify removes the right to claim for that accounting period and there is no right of appeal.
The new requirement means that companies should continually monitor their R&D activities from now on in order to protect their right to claim in the future.
SINGLE MERGED SCHEME
A single, merged scheme for R&D relief will replace the SME and RDEC schemes from 1 April 2024. The aim is to simplify the relief by moving to a single rate (20%) and set of qualifying rules.
It is key to remember that the definition of R&D for tax purposes remains unchanged.
In reality however there will be two schemes that will run in parallel as the enhanced rate for R&D intensive SMEs (introduced from 1 April 2023) will continue to be available under the current SME model. The threshold for R&D intensity has been lowered from 40% to 30%, making more businesses eligible for the enhanced rate.
If you would like to find out if your business may qualify as a R&D intensive company or have any other queries regarding the changes, please get in touch.
If you have any queries on R&D or would like assistance please contact Lucy Lloyd on 01633 653177 or Lucy.Lloyd@kilsbywilliams.com.
Alternatively, please contact your usual advisor on 01633 810081 or email info@kilsbywiliams.com.
