With a government committed to cutting red tape, the ‘old’ system for claiming UKRDTRI ( UK R & D tax reliefs and incentives) effective from 01 April 2024 may seem analogous. However, this is undoubtedly a huge leap forward in simplifying this key non-structural tax relief aimed at assisting STEM companies. Just to recap, for accounts beginning on or after 01 April 2024 (ie by 01 April 2025) we have:
A simplified ‘main’ relief scheme based on a credit for eligible development and exploration costs worth between 16 and 19% depending on company size and profit level.
A new ERIS scheme, protecting smaller companies from any detriment within the ‘new’ regime.
Transitional rules and rates whilst the ‘old’ schemes expire for accounting periods up to 31 March 2024.
Various regulatory changes to the administration of the schemes.
Abolition of non territorial basis for UK RD expenditure.
Digitalisation of the claim ‘start’ (but not middle and end stages) process enabling faster and more compliant processing in the long run.
Comment
I now have 4 manuscripts in print on the subject of the UK’s tax incentives for innovative companies. This reform was well overdue, with a stasis for large company claims and huge rise in SME claims (even for vegan cocktails?!? according to the rumour mill), change and fundamental change is most welcome.
A Wishlist
Other jurisdictions follow a ‘certification’ process for demonstrating the sci/tech ‘advance’ and do not have the complex ‘Tax Definition’. The outcome of continued consultation in this area would benefit from an independent technology board, but where to begin?
Measurement: Despite relief figures reaching some £3bn p.a. I still feel some unease with no ‘follow through’ by HMRC statisticians as to the outcome of projects receiving subsidies and their impact on recruitment of specialised personnel or within international markets.
The great thing about tax is reform is almost well perpetual, no matter how innovative. Remember to check out our live streams here,