In addition to the significant alterations made to research and development (R&D) tax relief effective from April 1, 2023, further amendments are set to come into force from April 1, 2024.

Starting April 1, 2024, companies engaging in eligible R&D activities will be eligible for a 20% expenditure credit. This credit is calculated based on the qualifying expenditure amount. Furthermore, qualifying expenditure will now encompass subsidised expenditure from April 1, 2024, although R&D conducted overseas will no longer qualify unless it cannot be feasibly undertaken in the UK.

For “R&D intensive” companies incurring trading losses, they will continue to be eligible for a tax refund instead of the expenditure credit. Effective April 1, 2024, the threshold defining “R&D intensive” companies is lowered from 40% to 30%. This adjustment implies that companies allocating at least 30% of total expenditure to qualifying R&D activities will now qualify for the more favorable tax refund.

Navigating R&D tax relief remains a complex endeavor, and we’re here to assist you in preparing a valid claim, especially considering HMRC’s heightened scrutiny and increasing rejection rates of claims.