Research and Development tax reliefs to be reformed from April 2023

Written by Chris Barlow


December 9, 2022

In his Autumn Statement, Jeremy Hunt announced that there will be changes to the Research and Development tax relief for small and medium-sized enterprises (SMEs)

When Jeremy Hunt delivered his long-awaited Autumn Statement last month, he outlined several changes to Research and Development (R&D). The R&D reliefs are in place to support companies working on innovative projects in science and technology. They can be claimed by companies, including SMEs, that seek to research or develop an advance in their industry. They can even be claimed if the project is unsuccessful! 

To get R&D relief, you need to be able to explain how a project: 

  • Looked for an advance in science and technology
  • Had to overcome uncertainty
  • Tried to overcome this uncertainty
  • Could not be worked out easily by a professional in the field. 

The government currently have an SME R&D tax relief in place, which includes an SME additional deduction of 130% and SME credit rate of 14.5%. These mean that SMEs can deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction. They can also claim a tax credit if the company is loss making, worth up to 14.5% of the surrendable loss. However, for expenditures incurred on or after 1st April 2023, the additional deduction will be reduced to 86% and the SME credit rate will decrease to 10%. 

It’s important to note that the SME R&D tax reliefs can be claimed by SMEs who have both of the following:

  • Less than 500 staff
  • A turnover of under 100 million euros or a balance sheet total under 86 million euros.

If you would like to receive further advice about the tax reliefs you can claim for your SME, please do not hesitate to get in touch with Chris Barlow:

[email protected]

+44 (0) 1 942 816 512

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