Budget changes to research and development relief

A major tax incentive that many clients have benefited from over the past two decades is research and development (R&D) tax relief which was introduced in 2000 for small and medium-sized companies and extended to cover larger companies in 2002. The relief allows companies that carry out qualifying R&D related to their trade to claim an extra corporation tax deduction for specific qualifying expenditure. In short it’s an efficient way for many businesses to secure more capital and in turn underpin innovation in their respective fields.

There was much talk in the Budget about innovation growth and spending with a new ‘blue sky’ technology fund but despite this some new policies will adversely affect innovation within SMEs. One was the slashing of entrepreneurs’ relief (now business asset disposal relief) with Mr Sunak reducing the lifetime limit from...