What the Merged R&D Scheme Means for Your Business
Effective from 1 April 2024, the UK introduced a merged Research and Development (R&D) scheme that combines the current SME and R&D Expenditure Credit (RDEC) regimes. This new framework expands R&D relief opportunities for both large businesses and SMEs investing heavily in innovation. Here’s a quick overview of the key changes.
Two Key Reliefs
Payable credit for all companies
Most businesses can now receive a payable credit, calculated based on R&D expenditure, to offset tax liabilities.
Relief for loss-making, R&D-intensive SMEs
SMEs investing significantly in R&D but making losses can claim a repayable credit of up to 14.5%, helping to offset losses and support continued innovation.
RDEC: Taxable Credit for Companies
Under the new RDEC rules, companies can claim a 20% taxable credit for qualifying R&D expenditure. This credit helps cover corporation tax liabilities and can be refunded if there are no tax dues.
What Qualifies as R&D?
To be eligible, R&D projects must address scientific or technological uncertainties and lead to advancements in the field. This can include improving existing products or processes, not just creating new ones.
Claiming R&D Relief
To claim, businesses must notify HMRC within six months of the end of the accounting period in which the R&D occurred. Accurate documentation of R&D activities is essential for a valid claim.
How We Can Help
The new R&D scheme provides expanded relief options, but it’s important to understand the eligibility criteria and claim process. If your business is engaged in R&D, make sure to seek professional advice to ensure you’re maximising available relief.
To find out more, please consult our free guide. For more information on the new R&D scheme, get in touch with us today.
