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Reforms to research and development

04 December 2023 / Maria Kitt
Issue: 4916 / Categories: Comment & Analysis , PAYE , R&D relief , Admin
Two become one

Key points

  • A new ‘one size fits all’ UK research and development (R&D) incentive scheme will take effect from 1 April 2024.
  • The definition of R&D activities for tax purposes remains unchanged.
  • The mechanics of the new scheme provide a taxable credit of 20% on a company’s eligible R&D costs.
  • New 2024 scheme will simplify the rules relating to the PAYE cap.
  • Administrative changes include having to notify in advance that a claim is to be made.

Twenty-three years ago an obscure allowance a ‘scientific research allowance’ was swept aside in favour of a new ‘research and development’ (R&D) tax deduction intended to encourage more investment in R&D by innovative UK companies. The ‘development’ leg of the incentive produced a huge rise in the number of small and medium-sized enterprise (SME) claims. Last week in his Autumn Statement chancellor of the exchequer Jeremy Hunt announced measures...

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