The Chancellor has set an ambitious target for research and development (R&D) spending in the UK.
Here’s a link to the budget document.
The explanatory notes and consultation documents will be published in due course, we expect the former to be published on 19 March.
The following extract from page 91 of the document summarises most of the points which relate to the RDEC and SME R&D scheme;
2.201 Research & Development Expenditure Credit (RDEC) rate – The rate of RDEC will increase from 12% to 13% from 1 April 2020, supporting businesses investing in R&D and helping to drive innovation in the economy.
2.202 Consultation on R&D tax credit qualifying costs – The government will consult on whether expenditure on data and cloud computing should qualify for R&D tax credits.
2.203 Preventing abuse of the R&D relief for small and medium-sized enterprises: Summary of responses and consultation – Following consultation last year, the introduction of the PAYE cap on the payable tax credit in the SME R&D schemes will be delayed until 1 April 2021. The government has listened to industry and will also consult on changes to the cap’s design, to ensure it targets abusive behaviour as intended while ensuring that eligible businesses are able to access the relief.
There is one further change which is not mentioned in the above document. You may be aware that from 6 April 2020 some changes are to be made to the legislation which relates to workers services provided through intermediaries. These changes could prevent some of the expenditure which R&D claimants currently include in their claims for externally provided workers from qualifying. The legislation bringing in the aforementioned changes to the workers services provided through intermediaries rules will include some consequential amendments to the externally provided workers provisions in Part 13 CTA 2009. These changes to the externally provided workers rules will ensure that claimant companies can continue to claim the same amount of relief for expenditure on research and development.
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