Changes to R&D Tax Relief coming 1st April 2023

By RfM Transform

22 Mar 2023

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From 1st April 2023, the R&D tax credit scheme will see some changes as HMRC reforms its current system. While it’s important to be aware of these changes, there’s no need to panic. With guidance and support from the team at RfM Transform, your business can still make the most of R&D tax relief.

If you are an existing RfM Transform client, you will already be well prepared but here are some of the changes that could still affect you:

  1. Companies will be required to submit an additional information form at the same time as the R&D claim is submitted. This is in addition to the report that HMRC still expects. It will need to provide some explanation of the R&D carried out and why it is considered R&D. It will also need to include breakdowns of categories such as Consumables, Staff costs, etc. 
We anticipate that this information will be taken from the existing reports that RfM Transform prepares for its clients, so there will be no additional responsibility for Transform clients.
  2. Some good news: Data licenses and cloud computing can now be included as part of your qualifying expenditure. Care does need to be taken about whether data is shared for the purpose of R&D or as a part of a product. Furthermore, Pure Mathematics can now also be defined as R&D – potentially offering further upside.
  3. The government is cracking down on spending outside of the UK though so subcontractors and externally provided workers only qualify if it is UK-related work, or can be classed as qualifying overseas expenditure.
  4. Changes to rates: HMRC is reducing the size of the benefit – although this will be mitigated somewhat by increases to Corporation Tax.
     Up to the 31st March 2023After April 1st 2023
    Profit Making Company130% Uplift on costs
     = 24.7% net benefit
    85% Uplift on costs
    =21.5% net benefit
    Loss Making CompanyCosts + 130% Uplift
    = 230 x 14.5% repayable credit
    = 33.4% Subsidy
    Costs + 86% Uplift
    = 186 x14.5% repayable credit
    = 18.6% Subsidy
  5. An additional piece of admin has been added to the process; each claim will now have to be signed off by a named senior officer of the company and include the name of the agent submitting the claim. The team at RfM Transform will guide you through this when it’s time to sign off on your Technical Report.
  6. Less likely to affect our existing RfM Transform clients, is the need to pre-notify R&D. This only applies to new claimants making a claim for the very first time or to those who have not made a claim in the last three accounting periods.

If you have not yet made an R&D claim, and think you may qualify, get in touch now so we can start the process for you as soon as possible. RfM Transform has helped its clients to save over £2.5 million via the R&D Tax Relief scheme, including cleaning chemical companies, manufacturers, cheesemakers, brewers, specialist technology companies and many more.

Get in touch with Tony Backhouse on 07969 900 864 to learn more.

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