R&D tax regime reforms: how do prepare for the upcoming changes
The government is changing the research and development (R&D) tax regime, stating that the changes are intended to increase productivity and promote growth in the UK. Several reforms have already been announced, including bringing pure mathematics research within scope of the reliefs. Also included is counting data and cloud computing as qualifying costs, restricting expenditure on some overseas R&D activities and a package of measures to target abuse and improve compliance.
How to prepare for the upcoming R&D tax regime changes
In our recent webinar, an expert panel discussed what the changes will mean for businesses, especially SMEs. Their top tips are:
- Ensure you are claiming everything you can.
- Be wary of boutique firms or cold approaches claiming they can get you a large return with little or no risk.
- Accelerate as much of your R&D spend as you can (SME regime).
- If you have significant cloud computing costs attributable to qualifying R&D expenditure and a March year-end, consider changing your year end, so you can benefit earlier. For example, for a December 2022 year end, move the year end back to 31 March 2023 so that your next accounting period starts on 1 April 2023 rather than 1 January 2023 ensuring you don’t miss out on nine months of relief.
- If you have significant overseas costs that will no longer be eligible for R&D tax relief from accounting periods starting after 1 April 2023, consider shortening your accounting period to extend the time from which you can benefit from relief. For example, for a June 2023 year end, bring forward the year end to 30 March 2023 so that the next accounting period runs from 31 March 2023 to 30 March 2024. This will give you nearly nine months of additional relief.
Expert R&D help
Visit our R&D page or speak to a member of our team. They will know what can and can’t be claimed for and whether to change your year end. Importantly, they ensure you present the information correctly to reduce the likelihood of HMRC querying your figures.